Working at Amazon for over a decade and ready to leave? Here's some advice to maximize benefits from your U.S. job:
Leaving your cushy corporate gig for the brave new world of entrepreneurship might seem like a daunting task, but Myra Deshmukh, the 38-year-old founder of Leadership Lab in Montclair, New Jersey, is here to show you the ropes. After 10.5 years of working at Amazon, she quit in March to start her own company, and she's got some advice for maximizing your benefits before jumping ship.
Deshmukh, a former Buying and Merchandising Manager for the apparel category at Diapers.com, an Amazon subsidiary, and a Senior Manager for Learning and Development Programs in Amazon's grocery business, knows a thing or two about job hopping. Here are five things you should do before you leave your job:
1. In the U.S.: The 401(k) Plan
If you're leaving your company to become self-employed and you're not sure if you'll work for another employer within the same calendar year, you should make the maximum contribution to your 401(k) plan for the year. This is a retirement savings plan offered by some U.S. employers. To maximize the benefits, you might have to change the percentage of your 401(k) contribution. It depends on when you're leaving and how much you earn.
When Myra left in March, she increased her contribution from 15% to 60% because she had two months, January and February, to max it out.
2. Paid Vacation Days and Personal Days
Depending on how your company handles your time off, at Amazon, we had vacation days and separate personal days. These were for days like paid vacation but given for personal reasons. If you're leaving your company or job in New Jersey, you can only get paid for your remaining vacation days – not your personal days. Myra had several personal days that she hadn't used. If she had left without using them, she would have lost all that money. She made sure to use all her personal days before she quit.
Make sure – if you're working in the U.S. – that your state allows a payout. If not, you should consider this when you quit and use these days to get paid for your accumulated vacation days.
3. Stock-Based Compensation
If you receive stock-based compensation from your employer, these stocks are usually held in an account at a bank. Technically, these stocks belong to you, but you can't diversify, sell, or invest them in anything else. To manage your stocks, you need to transfer them to a brokerage account. Companies don't mind if you transfer your stocks to a brokerage account, but you have to figure out what to do with them yourself. There are also some financial benefits to moving them out of your holding account. Myra got a lower interest rate on her mortgage when she transferred her stocks to a brokerage account at a certain bank.
4. Medical Services
It's important to use your medical services before you leave. You've probably already contributed to your plan through your paycheck for the part of the year you were employed. Before quitting, Myra planned to join her husband's insurance through his employer. But she wish she had fully used her own medical services before quitting. With her vision insurance, she could have gotten a free pair of glasses, but she didn't. After she quit, she thought she should have bought her glasses before she left.
5. Transportation Costs
At Myra's old job, they had commuter benefits where you could pay for transit with pre-tax dollars. She took the bus or train daily and paid with her commuter benefits. If she ever had to pay for parking, she could use them for that too. Myra wishes she had maxed out and bought a big MetroCard or transit pass in advance. But since she doesn't commute regularly anymore, she didn't think about it. If she had, she could still use them when she goes to the city.
By following these tips, you can ensure that you make the most of your benefits when leaving your job. Good luck with your new endeavor!
What about maximizing your 401(k) plan and stock-based compensation before transitioning to self-employment in the realm of personal-finance? It's wiser to utilize all vacation days, especially personal ones, as some states only offer payout for vacation days, not personal ones, in the domain of education-and-self-development. Additionally, consider transferring stock-based compensation to a brokerage account for better financial management and potential benefits in career-development.
