Don’t Leave Money and Benefits Behind
Many companies have an exit process that employees go through before leaving the company- whether they leave voluntarily or involuntarily. I had a conversation with a Human Resources Specialist who commented, “You don’t know how many people leave, and leave money on the table.” Since that time, I’ve made a concerted effort to remind others to not leave money and benefits behind.
If you have left or leave your employer (outside of retirement), don’t assume the only thing owed to you is your final check. If you submit a letter of termination or if you just quit; you may not know what you could be leaving on the table when you bypass your employer’s exit interview. Most employer Human Resource Offices try to get your interview completed prior to you leaving. Otherwise, they attempt to complete a virtual version if you have already left. There’s no reason to wait on them, though. It’s okay to contact Human Resources directly and request a meeting. If you have already left, it’s a good idea to call and find out if there is anything you may be entitled to and didn’t know about.
Leave Time Payout
In addition to your final paycheck, you may be owed a payout for sick leave, annual leave, credit, or comp time. All employers don’t treat these payouts the same. Some employers may not pay these benefits except for retirement. Did you know that, if you plan your retirement strategically, you could possibly walk away with a check for tens of thousands of dollars due to sick, annual, credit, and/or comp time payout? If your employer does not payout and you were a government worker moving to another agency at the same level of government, you may be able to transfer your leave to your new agency. Ask them about that. Your leave time is money, in more ways than one.
Insurance Coverage
Most employers are also required to extend medical coverage under COBRA and life insurance coverage, even if you resign. Sometimes it works out where you get a 30-day coverage period and an option to continue the coverage (many times at a higher amount), if you chose to. If you are not moving immediately into a position that offers coverage from day one, you should at least ask about these benefits so you can make an informed decision about what’s best for your family- especially if that coverage is medically necessary. Since these two benefits are governed by the state, you may find help with your state’s Department of Labor, as well.
No-fault Pay
You may be entitled to a severance package or
unemployment insurance if you lose your employment through no fault of your own. It’s worth checking out. Speak to your Human Resources office for guidance on severance packages and contact your local Unemployment Office for information on unemployment entitlement.
Pension Benefits
The biggest thing that people leave on the table is possibly pension money. Most employers are required to offer a pension plan to employees. If you participated in your company’s pension plan, regardless of how long you worked with them, you are eligible for a payout. Employers have a minimum years of service before their employees becomes vested and eligible for monthly pension payments in retirement. But even if you don’t meet that vestment period, you are entitled to the money that is in your pension fund. You contributed hundreds or even thousands of dollars while working there; and your employer may have contributed, too- especially through the Employer Matching Program. Don’t leave that on the table. And since some employers auto-enroll you into a pension plan, you may not even be aware of pension money you might have or may have had.
When you leave, you can get that money through a lump sum, which most financial professionals would probably advise against. Or you can roll that money into your new employer’s retirement fund (if they allow it) or into an Individual Retirement Account (IRA). A rollover averts taxes and penalties because you never touched the money. It remained in a retirement account.
If you are wondering about possible pension benefits from old employers, you can check with the Pension Benefit Guaranty Corporation (www.pbgc.gov) or the Department of Labor (www.dol.gov).
My Story
When I left my former employer, many years ago, I received a letter in the mail telling me I was owed a couple thousand dollars (or so) and asking me what I wanted to do with it. I was clueless so asked them to send it to me. I was hit with taxes and a penalty, but all I saw was extra money. Conversely, a relative left an employer several years ago and was allowed to leave her money in the same pension account. She never thought about it again and it grew thousands of dollars. She didn’t know what to do with either, so left it alone. A few days ago, I talked about this as one of the few ways procrastination can actually work for you. Simply doing nothing worked on her behalf
Conclusion
Don’t leave any money on the table. Have the conversation you need to have with Human Resources regardless as to the circumstances that caused you to leave. Sometimes just getting that information is enough to help you make an informed decision. If it isn’t, find someone who can help.
