New job? Make the most of your employee benefits
These four steps will help you get settled and get down to business
New jobs bring new names, faces and responsibilities. In the rush of acclimating to the work environment, you might overlook details like direct deposit forms, insurance coverage and retirement plans. But it’s important to make the most of all your new job’s benefits—from Flexible Spending Accounts to tuition reimbursement programs to 401(k) plans. To help you make the most of your workplace perks, we’ve put together this job transition checklist.
Set up direct deposit
One of the benefits of direct deposit: It’s usually the fastest way to get your wages or salary into your bank account. If you’d like to sign up for direct deposit, do so as soon as possible because it may take up to two pay periods to take effect. You may want to stop certain automatic bill payments, transfers or withdrawals from your account until you’re sure direct deposit is in effect. Once you’ve checked your new pay cycle, you can reinstate your automatic transactions, or establish new ones, and even adjust your automatic bill payment dates to sync up with paydays.
Read up on your insurance plans
Your new job might offer you health insurance coverage and perhaps dental, vision, accident, disability or life insurance, too. Employer benefits vary, so take the time to review your plans and their coverage specifics. You’ll want to know how they apply to you and anyone else covered by the plan, such as your spouse or children.
Take advantage of pre-tax benefits
Pre-tax benefits can lower the amount of wages you owe income taxes on. The money comes out of your paycheck before taxes are withheld, and it doesn’t count as taxable income. Pre-tax deductions may include:
- Contributions to retirement savings
- Health insurance premiums and Health Savings Account (HSA) contributions
- Flexible Spending Account (FSA) contributions for expenses like child care, dental, vision care and eligible out-of-pocket medical expenses
- Certain transportation and parking benefits and related payroll deductions
- Certain tuition reimbursements
Consider rolling over your retirement savings
If you have retirement savings in a previous employer’s defined contribution plan, you have a few options for it when you start a new job. You may be able to simply leave it where it is. You may be able to move it into your new employer’s retirement plan or into a traditional or Roth IRA. You can generally cash it out. Or you can do a combination of these things.
Consider all the factors and implications before you make your choice. For example, if you take your retirement savings in cash when you leave a job, you will likely pay an additional tax if you are not at least age 55 in the year of the distribution, and the distribution might push you into a higher tax bracket.
Each choice involves potentially different investment options and services, fees and expenses, withdrawal options, required minimum distributions and tax treatment, and provides different protection from creditors and legal judgments. For more information, read the Merrill Edge® article on what to do with your retirement savings if you’re changing jobs or retiring. Or learn more about rollover IRAs at merrilledge.com or by calling a Merrill Edge rollover specialist at 888.637.3343.
No matter how you decide to handle the benefits your new job offers, make sure to dig into your new employer’s plans and policies early. And don’t be afraid to ask questions. Your human resources and benefits representatives can help you make sense of the employer’s policies and programs. The better you know your new job’s benefits, the better you can take advantage of them.
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