Give Your Notice
 

Turning in your resignation isn't easy. Even if you hate your job, your boss, or both—and can't wait to start your new job—do your best to resign tactfully. You never know when you’ll need a reference.

If you have an employment contract that defines the notice you should give, follow it. If you have no contract, offer at least two weeks notice—or more if your employer will have difficulty replacing you in two weeks. This assumes, of course, that your new employer is willing to wait longer for you to start.

What to Say

Be brief, pleasant, and to the point. Tell your supervisor that it’s time for you to move on. Mention what your last day will be and offer to help in the transition. Then thank the person for the positive things you experienced at the company and the opportunities to learn. Resist going into attack mode. Do not complain about the company, colleagues, or, especially, your supervisor. There’s no point in doing so now that you’re leaving.

Write a Resignation Letter

You may resign verbally, but you should also provide a resignation letter. This will reflect well on your professionalism and increase the likelihood of getting a positive reference.

Ask for a Reference

Before you leave, ask your employer to provide a letter of recommendation. It’s better to ask for it now than years in the future, when your supervisor may have moved on to another company.

Return Company Property

Return any company property as soon as possible. You don’t want your employer to have to chase you down later. Nor do you want to be responsible for it in the event it gets damaged or lost during the transition.

Know Your Termination Benefits
 

Before you leave, be sure to confirm the benefits and salary you’re entitled to as a departing employee. This includes: continuing health insurance coverage through COBRA; collecting unused vacation and sick pay; and, keeping, cashing in, or rolling over your 401K or other pension plan.

Collect unused vacation and/or sick pay

Vacation time can be credited in advance, as you earn it, (sometimes called “accrued”), or after you’ve earned it. When you leave an employer, you will automatically be paid for any time that you have earned but not used.

For instance, if you get 14 days of vacation January 1, and terminate your employment on June 30, you will be paid for 7 days of vacation if the vacation time is accrued throughout the year. If the vacation time is awarded based on the previous year, you should be entitled to all 14 days.

Vacation days carried-over from a previous year but not used are paid to you upon termination.

Paid Time Off (PTO) is time that you can use for vacation, sick leave, dependent sick leave, short-term disability, or whatever you need the time for. PTO is paid out like vacation, as described above.

Most employers do not pay you for unused sick days because this is not usually considered an earned benefit.

Check your employee handbook, benefits book, or with your human resources department to learn how your paid time is accrued and paid-out upon termination.

Make plans for your health benefits

Health benefits (medical, prescription, dental, and vision) offered by an employer enjoy special treatment under two laws:

The Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA) may help you continue your health insurance coverage for a time.
COBRA is a federal law designed to protect employees and their dependents from losing health insurance coverage as a result of job loss or divorce. If you and your dependents are covered by an employer-sponsored health insurance plan, a provision of COBRA entitles you to continue coverage when you'd normally lose it. Most larger employers (20 employees) are required to offer COBRA coverage.

As an employee, you're entitled to COBRA coverage only if your employment has been terminated or if your hours have been reduced. However, your dependents may be eligible for COBRA benefits if they're no longer entitled to employer-sponsored benefits because of divorce, death, or certain other events.

Unfortunately, you can't continue your health insurance coverage forever. You can continue your health insurance for 18 months under COBRA if your employment has been terminated or if your work hours have been reduced. If you're entitled to COBRA coverage for other qualifying reasons, you can continue your coverage for 36 months.

Keep in mind that, whatever your circumstances, you'll have to pay the premium yourself for COBRA coverage--your employer is not required to pay any part of it.

However, if you're eligible for COBRA coverage and don't have any other health insurance, you should probably accept it. Even though you'll pay a lot more for coverage than you did as an employee, it's probably less than you'll pay for individual coverage. You won't be subject to any health screenings, tests, or other pre-existing medical condition requirements when converting to a COBRA contract. Your COBRA benefits and coverage will be identical to those provided to similarly enrolled individuals.

The Health Insurance Portability and Accountability Act of 1996 expanded COBRA.
In 1996, HIPAA expanded certain COBRA provisions and created other health-care rights. In many ways, HIPAA took a significant step toward health-care reform in the United States. Some of its provisions may affect you. The major provisions of HIPAA:

• Allow workers to move from one employer to another without fear of losing group health insurance
• Require health insurance companies that serve small groups (2 to 50 employees) to accept every small employer that applies for coverage
• Increase the tax deductibility of medical insurance premiums for the self-employed
• Require health insurance plans to provide inpatient coverage for a mother and newborn infant for at least 48 hours after a normal birth or 96 hours after a cesarean section

For example, assume you're pregnant and covered by a group health insurance plan at work. You decide to take a job at another firm. Under HIPAA, pregnancy cannot be considered a pre-existing condition for a woman who's changing jobs if she was previously covered by a group health insurance plan. So if you had insurance at your old job, you can't be denied health insurance coverage at your new job simply because you're pregnant.

However, many companies require you to be employed for 30 days or more before you become eligible for coverage. If you are nearing the end of your pregnancy, and that requirement poses a problem for you, you may be eligible for coverage under COBRA through your former employer.

©2003 Forefield, Inc.

Secure your retirement

When you leave a company, you may be entitled to money from the employer's pension, 401(k), or some other form of employer-sponsored retirement savings plan. There are generally two types of retirement plans:

Defined Benefit Plans: These types of plans provide a specified retirement benefit upon your retirement. The benefit is based on the number of years you worked for the employer and the pay you made during that time.

Defined Contribution Plans: These types of plans do not guarantee a benefit at retirement, but state the amount that will be invested now toward your retirement fund. The amount of money available at retirement is based on the funds put in and the money they have earned since contributed. For instance, 401(k) plans are defined contribution plans.

The amount of your retirement benefits you get can be complicated. The bottom line: any money you contributed (or its market value, which can actually be less than what you’ve contributed) is yours. You can take it with you, if you choose.

As for employer’s contributions, whether you are entitled to them depends on the plan’s “vesting schedule.” In defined benefit plans, the contributions are all from your employer. In defined contribution plans, your employer probably contributed “matching funds” that are subject to the vesting schedule. Generally, there are two vesting schedules used¹:

• Five-year cliff vesting: Under five-year cliff vesting, employees must be 100% vested once they’re credited with no more than five years of service. Prior to completing the fifth year of service, the employee’s vesting percentage may be any percentage, including zero. This schedule is known as “cliff” vesting because the employee typically will jump from no vesting to 100% vesting once the employee completes the fifth year of service.
• Seven-year graded vesting: Under seven-year graded vesting, employees must be 100% vested once they’re credited with no more than seven years of service. Since 100% vesting can be delayed longer under this option, the law requires that a minimum vesting percentage apply to earlier years. The minimum percentages are as follows:
  • Upon completion of 3 years of service – 20% vesting;
  • Upon completion of 4 years of service – 40% vesting;
  • Upon completion of 5 years of service – 60% vesting; and
  • Upon completion of 6 years of service – 80% vesting.

Upon termination, your employer or it’s retirement plan administrator will provide detailed instructions on what you can do with your retirement benefits. Your options typically include:

• Transferring or "rolling over" your money to an Individual Retirement Account or annuity (IRA). The money can be transferred directly to the IRA to avoid penalties and continue the tax-deferred status. This means your hands never touch the money. Instead, it is transferred directly into the IRA by your current employer. You can also take receipt of the lump sum and then deposit it yourself within 60 days to another qualified new retirement plan. This gives you short-term access to the money—but there is a catch. Your employer must withhold 20 percent for federal income taxes from your taxable distribution, so you may only receive 80 percent of your money.
  
  To illustrate, consider these tax consequences for a moment: If you withdrew a $50,000 lump-sum distribution from your 401(k) before age 59-1/2, all of which is taxable, $10,000—or 20 percent—would be withheld for federal taxes. The distribution would be subject to ordinary income taxes as well as a 10 percent penalty, which in this case could be an additional $5,000.
  
  But, if you roll the money over into one or more IRAs, be sure you have established special "conduit" IRAs. In these IRAs, if the money from your lump-sum distribution is not mixed with any other funds, you may be able to transfer the money to another employer's 401(k) plan, if you choose.
• Move the money to your new employer's 401(k) plan, if permitted. After all, the 401(k) is a savings plan of choice for so many workers because it not only offers tax advantages, but also often includes a matching contribution from the worker's employer—say, 50 cents for every dollar that the employee invests, to a certain limit. Also, people who participate in a 401(k)—or a 403(b) plan for employees of hospitals, schools, colleges and non-profit organizations—can often borrow from their retirement accounts. That option usually is not available with an IRA.
  
  Keep in mind there is usually a waiting period of months or a year before you can enroll in your new employer's plan.
• Leave the money where it is, with your current employer's 401(k) plan. The decision may come down to who offers the best investment choices for you—your old company's plan or the new one.
• Take a partial withdrawal.

¹Internal Revenue Service, “The Fix Is In: Common Plan Mistakes - Vesting Errors in Defined Contribution Plans,” Retirement News for Employers, Summer 2005,

Copyright 2003-07, Metropolitan Life Insurance Company, NY, NY. All rights reserved.

Protect your loved ones

Your employer may provide and/or offer life insurance. In most cases, if your employer pays for life insurance, it is a “term life” insurance policy. That means it is only active as long as the employer pays the premiums. You may be able to convert the face value of the insurance to an individual policy offered by the insurance company. Keep in mind that you would have to pay the premiums directly to the insurance company. Since your employer paid the premiums while you were employed, you probably do not know what the coverage cost, but you will probably pay quite a bit more for the same amount of coverage yourself.

You also may have been given the opportunity to purchase additional life insurance through your employer’s plan. Like the insurance offered by your employer, you may be able to convert this coverage as well. If the coverage was a whole or universal life insurance plan, you also might be able to keep the coverage and pay for it yourself. This is called “portable” because you can just keep the same plan of coverage. Keep in mind that the premium will usually increase because you are no longer part of a large group, but an individual.

In cases of insurance you pay for, the insurance company will probably notify you of your options. In the case of insurance provided by your employer, you will have to take the initiative if you are interested in converting it. Information should be available in your employee or benefits handbook or from your human resources department.

Learn about all of your benefits

You may have many other benefits, as well, including disability, accident, stock purchase, long term care, auto, or homeowners that your employer made available for you. You can generally keep or convert these plans if you have been paying for them yourself. Check the documents for any benefits in which you are participating to learn their individual options upon termination with your employer. Remember that they probably have deadlines, such as 30 days, so it is a good idea to check as soon as you know you are leaving.

Gear Up for Your New Job
 

Starting a new job does not begin on your first day. It starts before you even leave your current employer. Use the time between giving notice and starting your new job to get mentally prepared for the challenge ahead.

Recognize that, whatever the level of the job, there will be a "settling in" period in which you will require both extra concentration and positive support. Both your private and working lives will change.

So it makes sense to discuss these changes with your family before they occur. Discuss issues like child care, hours, commuting, etc. If you are relocating for your new job, you and your entire family will go through some major adjustments.

Research the background of a new employer

The more you know about your new employer, the easier it will be for you during the first few months of employment. Expand on the research you will--or should--have carried out prior to your interview.

If you don't already have a copy of the new employer's annual report, obtain one. Identify:

• Your new employer's competitors.
• Their relative degree of success or failure.
• The basis on which they compete (such as price, quality, or service) or are protected from competition (because of location or access to raw materials for example).

Talk to people you know about the company. Goal: to learn all you can about the culture of the organization, the people with whom you will be working, the structure within which they work, and the reputation of the department you will be joining.

Learn about the industry if you are new to it. Search the Internet for trade journals and Web sites. You can even ask your new employer to supply you with information that you can review before you come to work for them. Most employers would be happy to provide you with these resources.

Discover the background of the job opportunity

If you haven’t already, seek to find out if your job is newly created or if you’re replacing someone. If the former, find out whether it was created to solve a problem and if so, what problem?

For example, was it to cope with expansion in activity and if so, what caused the expansion? Find out the structural context of the newly created job, future plans for it, and, most of all, special expectations of you as the newly appointed jobholder. Is the job unique in the organization or are there others like it?

Try to identify what characteristics and skills you are bringing to the job which made you the best person for it. Remember that these characteristics and skills will be used to evaluate your performance.

Add to your existing knowledge about the job

Learning the following information will improve your job success probability:

• The purpose of the department.
• The purpose of your new job.
• Your responsibilities.
• Your authority.
• The structure of the department and company.
• The department’s place in the organization.
• To whom you report and your boss's requirements.
• Who, if anyone, reports to you.
• As much as possible about the culture and values of the unit and of the organization.
• Whether relationships are formal or informal--does this apply to all of them?

Make sure you are clear on practical matters, such as:

• Starting and finishing times (formal and real).
• Lunch and break arrangements.
• The use of the telephone for private calls.
• Performance appraisal.
• Employee benefits.
• The position on unions.
• Dress code (formal, business casual, or informal).

What you need to know may range from the obviously important to the apparently trivial. However, if it helps you become accepted and begin to achieve the purpose of your new job more quickly, it is worth knowing. This may apply even more if you have been appointed to a newly created job.

Get ready to feel bewildered

You will meet a lot of new people and learn many new processes, both directly related to your job or unrelated like learning to use the photocopier. Most people don't feel fully comfortable in their new job for at least six months, so be patient with yourself.

Survive Your First Few Days
 

You’re entering a period of intense learning and growth. But while you’re learning, you must also excel at your job. Here’s how to become part of the team as quickly as possible.

Starting a new job demands confidence. Don’t worry if you have doubts. Just keep them to yourself and appear as confident as possible to others. Part of demonstrating confidence is looking the part.

So dress your very best for your first day. Also, make sure to arrive early. If you’re traveling a new route, by car or mass transit, leave time for contingencies.

Now, when you arrive, remember that first impressions are very important. So walk in with a smile on your face, a bounce to your step, and your eyes ready to make contact.

When you meet people, be polite and friendly and be sure to give firm handshakes. Try to remember names as best you can.

In your initial conversations, take note of people’s responsibilities. Feel free to ask them questions about what they do. If you’re not sure of something, ask. People usually will be more than willing to help.

During your first week and months on the job, don’t challenge the way people do things. And never, ever utter the words, “That’s not how we did it where I used to work.” You don’t want them to think, “Well, why don’t you go back there?”

Other tips for adjusting to your new job:

• Ask questions. You’re better off asking someone for help than doing something wrong and having to re-do your work.
• Let people get to know you and try to get to know others.
• Use your lunch and coffee breaks to bond with your colleagues. Limit lunches with those at your old job; they represent the past. Your new colleagues represent the future.
• Make sure people who give you assignments have the authority to do so.
• Uncover who has influence, both officially and unofficially.
• Listen to the grapevine, but don't contribute to it. You don't want people to think you’re a gossip monger.
• Don't say negative things about your boss or your co-workers.
• Come to work early and stay a little late, if possible.
• Be open to projects or people needing help. But don’t neglect your current assignments.
• Remain open-minded. You’re an employee now, not a candidate. So you will see the negatives as well as the positives about your new job and employer. Be patient while a well-rounded picture emerges.

Enroll in Your Employee Benefits
 

Employers have to compete for the best human resources. Part of that process is offering benefits to attract and retain employees. Since you may have several plans from which to choose, be sure to make informed decisions.

As a new employee there are some decisions that you will need to make, most within 31 or 60 days from your date of hire.

Check with your Human Resources or Employee Benefits manager for information on your specific benefit options.

Update Your Plans for the Future
 

When you changed jobs, you may have increased your compensation—or decreased it. So make sure to adjust your spending and saving accordingly. The sooner you do, the more satisfied you’ll be with your new position.

Make the most of a higher pay

If you are making more money, you may have plans for it. What you don’t want to do is spend it as you make it, because then you will never become stronger financially over the long term.

One of the most important things to do with a higher compensation: Increase your retirement contributions. Studies show that most people are not saving enough money toward retirement. Increase your contribution right away before you start spending it. That way, you’ll never miss it.

You also might want to review your employer’s voluntary benefits, if they offer them. These provide increased financial protection for you and your loved ones in the future.

Important voluntary benefits to consider include life, long-term care, and disability insurance insurance.

The bottom line: have a definite plan for your increased pay.

Less money means more budgeting

Many people take jobs that pay less money for a variety of reasons. If you have a job that pays less than you used to earn, you have a good reason for doing it. Less pay, however, can mean financial hardship. To combat that, you may want to establish a budget.

Examine your financial goals
Before you establish a budget, you should examine your financial goals.

Start by making a list of your short-term goals (e.g., new car, vacation) and your long-term goals (e.g., your child's college education, retirement).

Next, ask yourself: How important is it for me to achieve this goal? How much will I need to save? Armed with a clear picture of your goals, you can work toward establishing a budget that can help you reach them.

Identify your current monthly income and expenses To develop a budget that is appropriate for your lifestyle, you'll need to identify your current monthly income and expenses.

You can jot the information down with a pen and paper, or you can use one of the many software programs available that are designed specifically for this purpose.

Start by adding up all of your income. In addition to your regular salary and wages, be sure to include other types of income, such as dividends, interest, and child support.

Next, add up all of your expenses. To see where you have a choice in your spending, it helps to divide them into two categories: fixed expenses (e.g., housing, food, clothing, transportation) and discretionary expenses (e.g., entertainment, vacations, hobbies). You'll also want to make sure that you have identified any out-of-pattern expenses, such as holiday gifts, car maintenance, home repair, and so on. To make sure that you're not forgetting anything, it may help to look through canceled checks, credit card bills, and other receipts from the past year.

Finally, as you list your expenses, it is important to remember your financial goals. Whenever possible, treat your goals as expenses and contribute toward them regularly.

Evaluate your budget
Once you've added up all of your income and expenses, compare the two totals. To get ahead, you should be spending less than you earn. If this is the case, you're on the right track, and you need to look at how well you use your extra income. If you find yourself spending more than you earn, you'll need to make some adjustments. Look at your expenses closely and cut down on your discretionary spending. And remember, if you do find yourself coming up short, don't worry! All it will take is some determination and a little self-discipline, and you'll eventually get it right.

Monitor your budget
You'll need to monitor your budget periodically and make changes when necessary. But keep in mind that you don't have to keep track of every penny that you spend. In fact, the less record keeping you have to do, the easier it will be to stick to your budget. Above all, be flexible. Any budget that is too rigid is likely to fail. So be prepared for the unexpected (e.g., leaky roof, failed car transmission).

Tips to help you stay on track

• Involve the entire family: Agree on a budget up front and meet regularly to check your progress.
• Stay disciplined: Try to make budgeting a part of your daily routine.
• Start your new budget at a time when it will be easy to follow and stick with the plan (e.g., the beginning of the year, as opposed to right before the holidays).
• Find a budgeting system that fits your needs (e.g., budgeting software).
• Distinguish between expenses that are "wants" (e.g., designer shoes) and expenses that are "needs" (e.g., groceries).
• Build rewards into your budget (e.g., eat out every other week).
• Avoid using credit cards to pay for everyday expenses: It may seem like you're spending less, but your credit card debt will continue to increase.

© 2003 Forefield, Inc.