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Career Changes

 

How you react to a career change is important. Creating or updating your financial plan can help you take control of your financial future.

 

 

Employment Change

 

People change jobs several times throughout their careers. The main financial concern faced when changing employers should be how to most effectively roll over the previous employer’s retirement plan to a new plan. Our team of Financial Advisors can help you avoid the many financial pitfalls involved with rollovers. A comprehensive financial plan and portfolio review should also be considered as part of any employment change.

 

Making a Job Transition

 

If you're moving to another employer, you have some big decisions to make. Should you take your old employer's retirement plan money with you? Which benefit options should you choose? How will your job change impact your financial situation? These are just a few of the questions you'll need to consider.

 

Make an Informed Decision about your Retirement Savings

 

Deciding what to do with your retirement savings may not be your first consideration, but it is important. The vested balance in your employer's qualified 401(k) or 403(b) retirement plan is yours to keep.

 

Is it better to roll the money into an Individual Retirement Account (IRA) or move it to your new employer's retirement plan? Your decision should be based on the choice that offers greater access to your funds, growth potential and tax advantages.

 

You have a number of options, each with different factors to consider. The following offers an overview of some things to consider, however, you may want to discuss your decision with a financial advisor, who can take into account your specific situation and cover all of the pluses and minuses. Rolling the money to an IRA may not be the best option for everyone.

 

 

Benefits, Finances and other Financial Planning Considerations

 

Along with what to do with your retirement savings, there are other decisions you'll need to make when you change jobs.

 A Financial Advisor can Help you Address Some of these Questions:

  • Do you understand your new benefits package and options, including health care and life and long-term disability insurance? Will you need additional insurance?
  • Have you determined how your job change might affect existing employee stock options?
  • How might your income and expense changes impact your future financial goals?

 

 

Get Help with Financial Planning During your Job Transition

 

A job transition can present many financial choices and options. Our team of Certified Financial Planners and Financial Advisors at Genesis Wealth Advisors can help you make the decisions that are right for you and help position you to meet your future career and retirement goals.

 

 

What if you Lose your Job?

 

There are a number of important decisions to make and steps to take right away.

 

Start with these:

  • Scrutinize your monthly expenses and overall budget.
    • Look at everything with a critical eye. Decide what's really necessary and what's discretionary. You may naturally spend less by not commuting (no cost for parking and gas) and eating fewer lunches out, but these budget cuts won't make up the income gap. Look for ways — large and small — to trim back expenses. For example, you may be able to reduce cable TV and internet services, switch to a less expensive grocery store and obtain better rates on your auto and homeowner's insurance coverage.


  • Apply for unemployment benefits.
    • Unemployment benefits (also known as unemployment insurance) can help stretch out the time that your dollars will last, so apply right away. Benefits won't be paid until you start the ball rolling. In most states, you can apply at the local unemployment office or online, making it convenient and fast.
    • Unemployment benefits are generally available for up to 26 weeks, depending on the state you live in and other factors.
    • Remember that taking severance pay, temporary work or retirement payouts may disqualify you from receiving benefits, so make sure you carefully consider your options.


  • Prepare to pay taxes.
    • You generally are required to pay taxes on unemployment benefits but money is not automatically withheld to cover them. Because of this, you'll need to set aside money to pay your taxes later or elect to have taxes withheld from your benefits if your state offers this option. Depending on your circumstances you may also need to make estimated quarterly tax payments. Talking to a tax professional can help you understand your tax obligations.


  • Secure health insurance.
    • There are several options to evaluate before securing health insurance after you lose your job
    • If you currently have health insurance through your employer, a federal law known as "COBRA" entitles you to continue receiving that coverage at your own expense for up to 18 months at group rates upon termination of employment.
    • Your employer or plan administrator is obligated to provide you with an election notice to enroll in COBRA coverage. This notice will inform you of the date your COBRA coverage is effective, when it ends and the cost. Group rates are available to COBRA participants, but they are more expensive than rates for active employees.
    • As a part of the Patient Protection and Affordable Care Act of 2010, you may qualify for health insurance through the Health Insurance Marketplaces, which are intended to provide affordable coverage. Depending on your income, you may qualify for a subsidy. Securing insurance through the Health Insurance Marketplaces may provide options that meet your health care needs better than COBRA, and it could potentially cost less. The open enrollment period for 2016 coverage begins on November 1, 2015. Visit HealthCare.gov for more information.
    • If your spouse has a health plan, evaluate how it compares to continuing your health insurance under COBRA or enrolling through the Health Insurance Marketplaces. In some cases, it can be less expensive with equivalent or better benefits. If so, try to enroll. A job loss is typically a qualifying event for making benefit changes.
    • And don't forget that if you have a Health Savings Account (HSA), you can continue to withdrawal the funds for eligible health care expenses.


  • Leave your retirement account alone if you can.

If you can avoid cashing in your 401(k) or retirement plan balance, you'll be better off.


The Drawbacks to taking a retirement plan distribution may include:

  • Distribution is subject to federal income tax and state tax may also apply.
  • 10% IRS early distribution penalty if you are younger than 59½.
  • The potentially large hidden cost of losing ongoing tax-deferred growth.‚Äč

 

 

Disability

 

A long-term disability changes almost everything in one's life.  Earning power is most likely diminished and extra expenses for medical assistance will likely be incurred. In addition, long-term care in a special facility might be required. Planning for unexpected medical problems should be part of an overall financial plan. Talk to our team of Financial Advisors for recommendations for long-term disability and long-term care insurance.

 

 

Talk with our Team of Financial Advisors

 

At times like these, meet with our team of Financial Advisors at Genesis Wealth Advisors to make sure you're making the best decisions to help you get through this difficult time.

 

 

To learn more about career changes and other financial services, contact Genesis Wealth Advisors to schedule an appointment today. 

 

Before deciding whether to retain assets in an employer plan or roll over to an IRA an investor should consider various factors including, but not limited to, investment options, fees and expenses, services, withdrawal penalties, protection from creditors and legal judgments, required minimum distributions, possession of employer stock and reduction/elimination of guaranteed benefits from the pension plan.