Financial Checklist for Starting a New Job

Congratulations on getting that new job! As you look forward to the opportunities that come with a new position, you may want to take into consideration some financial items that may come with the job change. Careful thought on these matters is important. With that in mind, we have provided the following checklist to help with your transition.

I. Employer-provided health benefits

1. Compare cost and coverage for health care before committing to changing jobs.
2. To avoid gaps in coverage, consider COBRA (the Consolidated Omnibus Budget Reconciliation Act) and confirm whether your current health care providers will be in-network at your new job.
3. If you have a Flexible Savings Account (FSA), spend all the funds before leaving your job as this money will not go with you to your new job. Each FSA has its own annual limit and is exclusive to each employer.
4. A Health Savings Account (HSA) does not need to be spent before leaving your former job.

II. Employer-provided retirement benefits

1. Consider the advantages/disadvantages of a direct rollover of your old 401(k) to either your new employer or to an IRA rollover account at a broker-dealer.
2. If your cash flow allows, find every way possible to contribute a 401(k) amount that will maximize the employer matching percentage.
   1. Consult with a tax advisor and/or financial planning professional about whether to contribute to a Roth or traditional 401(k).
3. If you have stock options, before leaving your old employer, understand the vesting schedule of the options and decide whether you’re willing to leave unvested options behind. If you have vested stock options, understand whether you must exercise the options before you depart or if you have a window to exercise options after you leave.
4. If you have a deferred compensation plan, understand the distribution options (e.g., lump sum, annual, etc.) before you leave your old job.
5. If you own (or will own) stock in a private company, consider the impact of illiquidity and any repurchase rights.

III. Tax issues

1. If your moving expenses are reimbursed by your employer, then the expenses are not eligible for a federal tax deduction (except in some situations for active-duty military personnel).
2. Keep records of unreimbursed expenses related to any move and consult with a tax professional to determine deductibility.
3. Review state and federal withholding numbers and any estimated tax payments. If your salary has changed significantly, consider changes to your Form W-4 withholding election.

IV. Cash flow issues

1. Are there significant near-term costs related to the move that need funding and liquidity?
2. Longer term, how will your cash flow be affected with tax, cost of living, and compensation changes? Think about changes in salary, bonus, stock option exercises, and the tax impact of all these variables.

V. Considerations if moving out of state

1. Domicile
   1. If you will be keeping homes in multiple states, you need to consider which home will be your primary residence (i.e., where you live most of the time) and how a “change in domicile” may impact your state income taxes. Keep detailed, accurate records of the time you spend in your claimed state of domicile.
   2. If you own property in multiple states, your estate plan should be reviewed to avoid needless costs related to probate in multiple states if you were to die. A revocable trust addition or change may be a good idea to consider.
      – Also review other documents in your estate plan such as wills, medical powers of attorney, living wills, etc. to make sure the documents are updated for your intentions and compliant with the laws in your primary state of residence.
2. Education funding: consider how funding a 529 may impact your ability to use state income tax deductions and/or K-12 education reimbursements.
3. If you have a trust, determine which state laws apply to the trust and see if a change needs to be made.
4. Legal: identify any changes in your new state of residence related to property rights, creditor protection, and community property.
5. If you are selling your primary residence, determine whether your gains will be within the parameters to avoid capital gains or plan for liquidity to pay the additional taxes.
6. Health care
   1. If you move to a neighboring state but keep your same medical professionals, this could result in a challenge to your state of domicile.
   2. Get referrals to new health professionals in your new state where relevant.
   3. For Medicare: Determine whether you are covered in the new area you will live and what options are available before you move to make sure there is no break in coverage. A move triggers an open enrollment period for Part D coverage and Advantage, allowing you to make changes.
7. Note that some higher-tax states may look closely at when you have moved to a state with lower taxes in order to challenge your domicile status.

VI. Miscellaneous

1. Remember to notify the U.S. Postal Service, IRS, financial institutions you do business with, and the Social Security Administration about your move.
2. Update your driver’s license, vehicle registration, and passport, and register to vote in your new home state.
3. Update your insurance policies and perform an audit of your property and casualty insurance.

At Segall Bryant & Hamill, we have helped clients understand the impact of the financial items associated with a change of job and a move out of state. We would welcome the opportunity to help you plan your transition to help make it as smooth as possible. Please contact your portfolio manager or email us at contactus@sbhic.com if you’d like to speak with us.

Last updated October 2021. This information has been prepared solely for informational purposes and is not intended to provide or should not be relied upon for accounting, legal, tax, or investment advice. The factual statements herein have been taken from sources we believe to be reliable, but such statements are made without any representation as to accuracy or completeness. These materials are subject to change, completion, or amendment from time to time without notice, and Segall Bryant & Hamill is not under any obligation to keep you advised of such changes. This document and its contents are proprietary to Segall Bryant & Hamill and no part of this document or its subject matter should be reproduced, disseminated, or disclosed without the written consent of Segall Bryant & Hamill. Any unauthorized use is prohibited.