{"id":5518,"date":"2016-05-08T22:13:26","date_gmt":"2016-05-09T02:13:26","guid":{"rendered":"https:\/\/kerryhannon.com\/?p=5518"},"modified":"2016-05-08T22:13:26","modified_gmt":"2016-05-09T02:13:26","slug":"9-money-moves-when-you-lose-a-job","status":"publish","type":"post","link":"https:\/\/kerryhannon.com\/?p=5518","title":{"rendered":"9 Money Moves When You Lose A Job"},"content":{"rendered":"
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If you\u2019ve ever been laid off, you know how it stings. I\u2019ve been there, too, and, sadly, growing numbers of workers have lost their jobs lately.<\/header>\n
\u00a0The first quarter of 2016 saw 76 percent more job cuts than the last quarter of 2015, according to global outplacement consultancy Challenger, Gray & Christmas<\/a>.<\/div>\n<\/header>\n
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If you become an unfortunate victim, you\u2019ll have a myriad of financial decisions to deal with pronto. And they\u2019ll demand clear thinking. So, just in case a job loss happens to you \u2014 or if it recently did \u2014 here are nine money moves you need to make:<\/p>\n

1. Ask the nitty-gritty questions. <\/strong>Find out whether \u201cany severance is being offered, whether the company has a written severance policy, when your insurance will be cut off, and \u2014 possibly most importantly \u2014 why you are being fired,\u201d says Donna Ballman<\/a>, author of Stand Up for Yourself Without Getting Fired.<\/a> <\/em>\u201cYou\u2019ll need this information when you apply for unemployment, if you want to talk to an attorney about potential legal claims, when you apply for a new job and when you have your next doctor\u2019s visit,\u201d counsels Ballman.<\/p>\n<\/div>\n

(Read on PBS Next Avenue)<\/a><\/p>\n

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2. Get your employment-related financial stuff.<\/strong> If it\u2019s not a quick shuffle out of the building with Security or HR, tap into your computer and make copies of: documentation of anything your employer owes you (say, commissions and bonuses); any employment agreements, confidentiality agreements and non-compete agreements <\/a>you signed; your performance reviews, commendations, awards, disciplines, recommendation letters and anything else about your work that might be useful to a lawyer or to your state unemployment compensation agency, advises Ballman.<\/p>\n

3. Scrutinize any severance agreement.<\/strong> It could contain a non-compete clause blocking you from working at certain places, for example. \u201cBe clear on the restrictions you\u2019re agreeing to in exchange for a severance payout. Be certain you aren\u2019t giving up vested benefits. The agreement should clearly state the status and amounts of your 401(k), stock options or pensions,\u201d says Ballman.<\/p>\n

Your best move is to tell HR or your boss that you need some time to evaluate any severance agreement. If you\u2019re being asked to sign something you don\u2019t fully understand, don\u2019t. First, talk to an employment lawyer; you can find one near you at the National Employment Lawyers Association website<\/a>.<\/p>\n

4. Examine your final paycheck.<\/strong> \u201cYou may be entitled to payout of all your accrued paid time off or vacation pay if the company doesn\u2019t have a use-it-or-lose-it policy or if your state requires it,\u201d says Ballman. If you\u2019re paid by the hour, check to be sure you\u2019ve been compensated for all the hours and overtime you worked.<\/p>\n

5. Line up health insurance<\/strong>. Many employers cut off your health insurance the day you lose your job; some continue it to the end of the month. Initially, if you don\u2019t have a spouse or partner\u2019s health plan to fall back on, you might opt for landing coverage through COBRA <\/a>(The Consolidated Omnibus Budget Reconciliation Act), which lets you to buy it under your ex-employer\u2019s group plan, generally for 18 to 36 months.<\/p>\n

Some employers subsidize or pay the entire cost of health coverage, including COBRA coverage, for terminating employees and their families as part of a severance agreement. You\u2019ll have 60 days to decide whether to sign up for COBRA; the insurance is retroactive to your loss of coverage date.<\/p>\n

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Donna Ballman<\/figcaption><\/figure>\n

Your other option: buy an individual health plan<\/a> from your state insurance marketplace or directly from an insurer.<\/p>\n

Losing job-based coverage is a \u201cqualifying life event,\u201d allowing you to enroll anytime, not just during the normal Open Enrollment period.<\/p>\n

If you\u2019ll need health insurance between the time you lose your job-based coverage and when a Marketplace policy starts (for example, you or a family member needs medical care), you may want to sign up for COBRA, since it\u2019ll continue providing benefits until your Marketplace plan kicks in.<\/p>\n

6. Consider replacing any employer-sponsored life or disability insurance you had.<\/strong> If you purchased either type of coverage this way, you may want to buy your own policy now. If so, compare prices by using online insurance brokers such as Accuquote.com<\/a>, FindMyInsurance.com<\/a>, and LifeInsure.com<\/a>.<\/p>\n

7. File for unemployment insurance.<\/strong> \u201cSome people hesitate to apply,\u201d says Ballman. \u201cWhy? It\u2019s your money. What do you think they\u2019ve been paying in from your paycheck all this time? It may not be a lot of money, but it will help tide you over.\u201d Apply by contacting your state\u2019s unemployment agency as soon as you are fired or laid off.<\/p>\n

Whether you\u2019ll qualify for unemployment benefits<\/a> depends on your state. To check your local law, visit the \u201cFind Local Help\u201d area of the U.S. Department of Labor\u2019s CareerOneStop site<\/a>. Before taking any freelance assignments or a part-time job, read your state\u2019s unemployment insurance rules; some work may reduce your benefit.<\/p>\n

8. Be sure you get all your vested retirement funds.<\/strong> Any of your 401(k) contributions belong to you, of course, but your employer\u2019s contributions (or matches) typically must be vested<\/a> before they\u2019re yours. You\u2019ll vest, or own, a certain percentage of your employer\u2019s contributions each year once you qualify for them.<\/p>\n

9. Manage your retirement account. <\/strong>Chances are, when you leave your employer, you\u2019ll want to transfer your accumulated retirement savings to a self-directed IRA<\/a> that offers you more investment choices.<\/p>\n

After you receive the funds from your employer plan, you have 60 days to complete the rollover to an IRA or other tax-deferred plan. Wait too long and the amount will be taxed as ordinary income; if you were younger than 59\u00bd when the distribution occurred, you\u2019ll face a 10 percent penalty, too. A direct rollover straight to an IRA or a plan at your next employer is best, so the money never comes into your hands. Ask your plan administrator to make the payment directly to another retirement plan or to an IRA.<\/p>\n

You can, alternatively, leave the money in your ex-employer\u2019s plan, and sometimes that\u2019s more cost effective. Large corporations often negotiate with financial service firms for lower fees than you can get on your own in an IRA account.<\/p>\n

My advice: Meet with a financial adviser to figure out what\u2019s best for you. As a rule, I think an adviser should have the Certified Financial Planner designation, awarded by the nonprofit Certified Financial Planner Board of Standards.<\/p>\n

Just don\u2019t cash out your 401(k) balance<\/a>. If you do, you\u2019ll owe income tax on any withdrawals and possibly that 10 percent penalty. As I wrote in this Next Avenue post<\/a>, extracting retirement money before retirement is a weighty problem; nearly 45 percent of workers cash out their retirement accounts when changing jobs, according to the Women\u2019s Institute for Secure Retirement (WISER).<\/p>\n

The last thing you need after losing your job is a wallop from the Internal Revenue Service.<\/p>\n

\"Kerry\"<\/p>\n

By Kerry Hannon<\/a>\u00a0<\/span>Money & Work Expert<\/span><\/div>\n

\u00a9 Twin Cities Public Television – 2016. All rights reserved.<\/a><\/p>\n

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