Ever do the corporate shuffle? You’re bound to soon: The number of workers changing jobs each year has grown 25 percent since 1990, with almost 14 million employees giving notice or being laid off in 1994 alone. On average, you’ll switch employers at least five times during your career, putting in about eight years at each. That’s down from about 11 years in 1990.
But when it happens to you, you want to be smart about making an exit. Otherwise, you could miss out on a plump severance package or a continuation of health insurance. Plus, “Leaving your job is an important time to gather your references and to expand your network,” says Priscilla Claman at Career Strategies, a Boston consulting firm.
Once you close the door, don’t count on anyone arranging extended benefits or pay. “After you leave, it could be harder to get the attention of your human resources department,” says Craig Schneier, a Princeton, N.J., management consultant.
If you are leaving under your own steam, give at least two to three weeks’ notice. Then start lining up the benefits and pay you’re due and any written recommendations.
Here’s how to walk away right:
– Avoid gaps in health insurance. Even if you start the new job right away, you may not qualify for its insurance for three months or so. Thankfully, under the so-called federal COBRA law, employers must extend your health benefits for 18 months–at a cost of 102 percent of your premium. You pay the full premium, but your company’s group rate is usually still a bargain–ranging from $100 a month for basic coverage to $1,000 or so for a family with a serious medical history.
You have 60 days after leaving to sign up for COBRA coverage. If you get sick or injured during those two months and you didn’t arrange for the extension, you’ll still be covered if you pay the premiums retroactively.
– Max out on your 401(k). No matter why you’re leaving, you’re entitled to get any money you paid into your employer’s 401(k) or 403(b) plan. Unless you’re vested, however, you forgo any money your employer contributed to your account. Vesting usually takes five years. So if you’ve been diligently tucking away the average $2,000 a year into a 401(k) and you’re only months from being vested, consider waiting a bit before calling it quits. You could end up with 50 percent more cash that way.
Whatever you do, don’t cash out your 401(k) or 403(b). Roll it over into your new employer’s plan or into a tax-deferred individual retirement account. Sure, it’s tempting to grab the dollars, but if you cash out before age 59 1/2, you’ll pay an immediate 10 percent penalty plus income taxes on the amount you withdraw.
To roll your money into another 401(k), you’ll need forms from both your old and new employers. If you’re not permitted to enroll in the new plan right away, you can park your funds in a so-called conduit IRA, an account you can open at your bank to hold your money until you’re eligible to roll it over into the new plan.
– Shelter your pension and profit-sharing funds. You may be able to roll over this money into your new employer’s plan. But you’re better off moving it to an IRA. Brian Sutliff, a Columbus, Ohio, financial adviser, says, “An IRA gives you unlimited investment options.” Once you receive your check from your old employer (usually in about a month), you have 60 days from the date on it to move your money into the IRA or else face a tax bill.
– Check on any stock-option plan. Such plans give you the right to buy your company’s stock at a certain price within a specific time period. Some firms make you exercise your options before you leave. Others offer a 90-day grace period.
– Try to up the ante on your severance. Employers aren’t required by law to provide severance to dismissed or laid-off employees, yet 83 percent of companies do–typically offering one to two weeks of pay per year of service. Call an industry association in your field to discover some benchmarks. Then use your research to negotiate.
You may also be able to convert some proffered benefits into cash. For instance, if you don’t need your employer’s outplacement services, ask your boss if you can trade them in for pay. You might be able to garner as much as 15 percent of your salary that way.
– Get all the pay you’re owed. If your employer doesn’t offer you money for unused vacation or personal or sick days, says the American Civil Liberty Union’s Lewis Maltby, “just ask. It’s not always required by law, but it’s the fair thing to do.” If you usually receive an annual bonus, try not to forfeit the whole amount when you leave midyear. “Negotiate to get your bonus on a pro-rated basis,” says Claman.
– Build your reference file. If you are leaving on good terms, get a few complimentary notes from your boss, other company executives, colleagues or clients before you go. And don’t be shy. “Sometimes it’s awkward to ask,” says consultant Schneier, “but people understand you need something in writing.” Also, mine your personnel file for above-average performance reviews and records of promotions. While these files–kept by your human-resources department–legally belong to your employer, most firms let employees photocopy them.
– Beware the long goodbye. Many companies conduct in-depth exit interviews of employees who resign. These interviews are mainly for your employer’s benefit: “Our aim is to figure out why employees leave,” says Pat Crowley, vice president of employee relations for Merrill Lynch in New York City. Even so, most consultants say it’s wise to sit still for exit interviews in order to cement relations. Just be circumspect. “You can’t assume what you say will be confidential,” says Kathy Starkey, a human resources consultant in Memphis.
– Walk away with only what’s yours. You may think the client lists, written research and computer files you produce at work belong to you, but if you leave with anything your company deems confidential, you could face court action. “My advice,” says the ACLU’s Maltby, “is don’t take any chances. You don’t want to risk losing good references and contacts by leaving with company property.” For borderline materials, talk to an employment lawyer to make sure you’re not legally vulnerable if you cart them away.
