Tuesday, November 25, 2008

New Job Checklist--Making the Most out of Benefits

This post has been included in the Carnival of Personal Finance, Cyber Monday Edition, hosted by Mighty Bargain Hunter. Please have a look at some of the other great financial tips there this week.
As I have mentioned a bunch of times, I started a new job a few weeks ago. (And I am very thankful for it.)

The benefits are good, but I needed to do some planning to make the most of them. I finished the paperwork today:

Flexible Savings Accounts

I have one for dependent care and another for medical expenses. Here's where people who track their expenses with Quicken or MS Money have the advantage--just run a report on your last year's spending on these categories, think ahead to any big known medical procedures or changes in child care arrangements, and you're done. Make sure to look at your plans covered expenses and exclusions as well--you don't want to set aside money and then lose it because the expenses aren't eligible.

I had to do a little homework to see if money paid to high school babysitters (we use them after school) qualify for the dependent care FSA. (They do, but if they are under 19, they can't be related to you. I'm not sure if that's an IRS rule or one for my plan, so make sure to read your own plan carefully.) I think the forms require Social Security numbers and paper backup, which is a little hard to produce with an informal hourly arrangement. Time for better record keeping.

If you can't estimate accurately, be conservative, because whatever money you save and don't use, you lose!

Retirement Plan
I'm not eligible for the 401K program for 6 months, but you bet I'll be taking advantage of that as soon as I'm able. My plan is to start with the percentage I was contributing at my last job plus 1/2 the percentage of my salary increase. Once we get the debt thing under better control, I hope to bump up to the maximum allows, which is currently $15,500 per year for most people. And once the new plan kicks in, I'll also roll over the small amount of money from my previous employer's 401K into the new one so that it's easier to track. (I'm trying not to look at the actual value for the time being.)

My previous employer gave me a COBRA form. I have until the first of the year to claim COBRA health coverage from them. I will not need it, but I'm holding on to the forms just in case something catastrophic happens. When you leave a job that provides health insurance, for specific reasons, the company will offer you the option to continue on their health plan (at your expense, of course). The quirk that works to your advantage is that you have a 60 days (or so) to sign up, so if you don't end up needing the insurance during that period, you don't have to spend the money. Anyway, even those who are young and healthy with no dependents should not be without health insurance, so if you are among the (too) many unemployed, hang on to that COBRA paperwork, and if you don't have a prospect of another job by the time the deadline looms, find the money and sign up.

All the Rest
Of course, I also did the the paperwork for the health, dental, disability, and life insurance.

Further Reading
US Department of Labor COBRA information
Maximize Your Employment Benefits from About.comThis

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