Are you obtaining the maximum utility from your employer benefits? Whether you are a new employee or are approaching retirement, it is important to understand and utilize the benefits provided by your employer.
Generally, employer benefits include retirement plans, health care-related benefits, group insurance options, education assistance, and vacation benefits.
Retirement Plan Benefits: If your employer offers a pension plan, you will likely be automatically enrolled. In some cases, you will have a choice between two different pension options that will accrue benefits using different methodologies.
In lieu of, or in addition to a pension, many employers offer salary deferral arrangements, such as 401(k) and 403(b) plans. Is there an employer match, and are you maximizing this benefit? Are you taking advantage of “catch-up” contributions at age 50? Are you trying to decide between a pre-tax deferral or a post-tax (Roth) deferral? Do you understand the pros and cons of each?
Do you have access to a deferred compensation plan or incentive stock options? If so, what are the rules, restrictions, and tax considerations?
Health Care Benefits: While you likely have access to a group health care plan, do you have access to a flexible spending account (FSA) or health savings account (HSA)? Are you aware of the tax benefits and accumulation restrictions? If you have young children, do you have access to a dependent care flexible spending account?
Group Insurance Policies: Does your employer offer group life, disability, or long-term care insurance? Before obtaining a policy in these areas, research the options through your employer as you may qualify for lower rates and less stringent underwriting requirements.
Education Assistance: Many companies provide tuition assistance or tuition reimbursement programs. In addition, as a result of the CARES Act, in 2020 employers may pay employees up to $5,250 for student debt repayments, and the payments will not be taxable to the employee.
Vacation Benefits: Is your plan subject to a “use it or lose it” rule, or are you paid-out at the end of the year or the end of employment? Don’t forget to review your vacation benefits and use your vacation time.
As a part of our financial planning process, we will help you make the most of your employer’s benefits, so contact us today to start your financial plan.