Broker Check

Actions to Take When Switching Employers

August 16, 2023

Leaving your employer can be an exciting time filled with new opportunities and possibilities! However, it's also important to take the necessary financial steps to ensure a smooth transition and protect your interests. It's easy to get so focused on your new job, that you miss some of the important details from your soon-to-be-previous-employer. 

I'll start by giving you a couple of personal & real-life examples:

My husband (sorry Houston-LOL! He gave me permission). When he left Germania Insurance about 10 years ago, he left his 401(k) there. Germania's 401(k) plan switched plan providers not once, not twice, but THREE times since he had left. Fortunately, Germania was (and is still) in business and the lady in HR was able to give us the contact information for the new 401(k) plan provider to roll his 401(k) over to an IRA. 

***If a company ever goes bankrupt and you don't know where the 401(k) was held, you will be going on a wild goose chase searching for the provider. There are thousands of retirement plan providers!


Here's another example why it's important to pay attention to your options:

When I still worked for the bank, they sent me a packet with the summary of the health benefits they provided, along with options on continuing those benefits and who to contact. Considering my profession as a Certified Financial Planner™, I read the lengthy document to its entirety. I realized I could keep the life insurance the bank had provided (up to a certain amount), but I only had 30 days to make a decision. I filled out the paperwork and continued my life insurance coverage as if nothing had happened. 

A previous coworker on the other hand, did NOT read this document. He is completely un-insurable due to major health issues that he will never recover from.  Had he read this document, he would still have life insurance. 


Important & Necessary Steps to Take When Leaving Your Employer:


🔹Review Your Retirement Savings & Download the Summary Plan Description (SPD): Review your retirement savings plan, including any 401(k) or other retirement accounts offered by your employer. Determine your vested balance and understand your options for rolling over your account to a new employer or into an individual retirement account (IRA).

🔹Evaluate Your Health Insurance Coverage & Download the Health Benefits Summary From Your Employer: If you had health insurance coverage through your employer, you'll need to evaluate your options for continued coverage. Determine if you're eligible for COBRA coverage, which allows you to continue your existing coverage for a period of time after leaving your employer, or if you'll need to seek coverage elsewhere.

🔹Plan for Your Severance Pay or Commissions/Bonuses Owed: If you're entitled to severance pay, review your employment contract to understand the terms and conditions of the payment. Determine how the payment will be taxed and how you plan to use the funds. Don’t forget to check on any commissions or bonuses!

🔹Create a Budget: Create a budget to account for any changes in income or expenses after leaving your employer. Determine your new monthly income and adjust your budget accordingly. Consider any changes in expenses, such as changes in health insurance premiums, transportation costs, or other expenses related to your new job.

🔹Update Your Financial Plan: Review your financial plan to account for any changes in income, expenses, or long-term goals after leaving your employer. Consider how your retirement savings plan, health insurance coverage, and other benefits may impact your overall financial plan. Update your plan accordingly to ensure you're on track to meet your long-term financial goals.

🔹Most importantly, Schedule an Appointment With Your Financial Advisor! They can sit down with you to review and discuss your options. Your Financial Advisor will also make any necessary updates on their end to make sure you're still on track!

By taking these steps, you can ensure a smooth transition and protect your financial interests when leaving your employer.