employers

Here's What It Means to Be Vested in Your 401(k)

Damian Davila — Wed, 02 May 2018 08:30:10 +0000

One of the biggest advantages to a 401(k) plan is having an employer that offers a match on your contributions. This is fairly common practice; in a review of 4.4 million retirement plan participants, Vanguard found that 94 percent of plans offered employer contributions.

Knowing that your employer is contributing or matching your contributions to your workplace retirement plan is awesome (who doesn't like free money?). Still, it's important to be aware that sometimes part of those contributions aren't fully yours until some conditions are met. That's called vesting.

What's vesting?

Let's get one thing clear: All of the money that you personally contribute to your retirement account always becomes immediately yours. When you have full ownership of funds in your 401(k), it means that you're fully vested (or 100 percent vested) on those funds.

On the other hand, employer contributions and matching contributions may be subject to some restrictions before they can become fully vested. Nearly half all employer-sponsored 401(k) holders are in plans with some type of vesting requirement for employer and matching contributions. All vesting schedules can be categorized as cliff or graded vesting. (See also: 7 Things You Should Know About Your 401(k) Match)

Graded vesting

Graded vesting is the most common way for employers to delay ownership of employer or matching contributions. Through graded vesting, you gradually gain ownership of employer or matching contributions over time. Around 30 percent of 401(k) plans with employer-matching contributions use a five- or six-year graded vesting schedule. For example, an employer could grant you 20 percent ownership over a five-year period. Assuming a $1,000 matching contribution, you would be fully vested to $200 (plus applicable capital gains) at the end of every year over a five-year period.

However, there are shorter (and longer!) graded vesting schedules. For example, an estimated 5 percent and 3 percent of 401(k) holders are in a plan with a three- and four-year graded vesting rule for employer matching contributions, respectively.

Cliff vesting

Unlike graded vesting, cliff vesting grants you full ownership of employer contributions to your account right away. The catch is that you have to wait a certain amount of time to gain that right. In 2016, 12 percent, 5 percent, and 8 percent of 401(k) plans followed a three-year, two-year and one-year cliff vesting schedule for employer contributions, respectively.

5 FAQs about vesting

Now that you know what it means to be vested in your 401(k), let's address some frequently asked questions about vesting.

1. Why do companies use vesting in 401(k) plans?

Workplace plans offer matching 401(k) contributions to attract top talent. In order to retain that talent, employers can use vesting to discourage leaving the company too soon. For example, with a three-year cliff vesting schedule, a worker would have to work that many years before becoming fully vested in all employer contributions from their first year of employment.

However, more and more plans are opting to provide immediate vesting: 45 percent of 401(k) plans provided immediate vesting of employer contributions in 2016. (See also: 8 Critical 401(k) Questions You Need to Ask Your Employer)

2. What happens with nonvested funds at the time of a rollover?

Once you leave your employer, you'll lose nonvested funds in your 401(k). This is why knowing the applicable vesting schedule is essential to know how much of your 401(k) you'd keep if you were to separate from your employer at any point in time.

When you separate from your employer, nonvested funds in your 401(k) return to your employer. So, keep an eye on when employer contributions become fully vested to appropriately time turning in your two-week notice. (See also: A Simple Guide to Rolling Over All of Your 401(k)s and IRAs)

3. What happens to nonvested funds when I retire?

There is some good news and some bad news. The good news is that according to the IRS, it is required that employees are 100 percent vested of all 401(k) employer contributions by the time they attain normal retirement age. The bad news is that the normal retirement age is determined by the plan administrator.

4. What happens to nonvested funds if my company disappears?

When a company goes kaput, it's just a matter of time until its 401(k) goes away as well. When a company terminates its 401(k) plan, it must offer 100 percent vesting of all funds, according to the IRS.

5. If vesting exists, why should I bother trying to get an employer match?

Getting those employer contributions is absolutely worth it because they don't count toward your annual contribution limit ($18,500 in 2018). You can't be 100 percent sure when you'll leave an employer, but you'll surely be happy if you can leave with a couple hundred or thousand dollars extra in your 401(k). Regardless of vesting rules, this is why pursuing a job that offers matching contributions is worth it.

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This article is from Damian Davila of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

9 Ways to Vet Your New Employer

Tim Lemke — Tue, 27 Mar 2018 09:30:19 +0000

If you have been contacted for a job opportunity, it may be a very exciting moment. But you also want to make sure the position is right for you. Will you fit in with the company's work culture? Is the organization on stable footing? And how do you learn about things like benefits or vacation policies?

This potential new employer wants to know all about you, so you should try to find out as much as you can about them, too. Let's examine these ways that you can vet a possible employer.

1. Ask questions during the interview

We assume that a job interview is all about the employer peppering a candidate with questions. But in many cases, it's just as much about them wanting you to feel comfortable in the role. In every job interview, you will usually be presented with the chance to ask questions, and that's when you can find out many things about the job and the company's mission and culture. This will also help you get a better sense of whether the hiring manager is someone you'd like to work for. Many employers will actually view you negatively if you don't ask questions, because it may suggest a lack of interest in the company or the position.

There is one word of caution, though, which is to avoid asking too many questions that might indicate you're only pursuing the job for the money or the perks. For example, asking only about vacation policies, salary, or benefits may backfire. While those are important questions, they can be addressed if you get an offer. (See also: 5 Questions You Should Ask at Every Job Interview)

2. Online reviews

There are a number of websites that offer the chance for employees and former employees to share information about a company. It's worth noting that some of these sites can skew to the negative, as workers may only be inclined to leave a review if they have a complaint. But many of these reviews are simply rundowns of objective facts on things like salaries, benefits, vacation time, and workplace policies. Popular review sites include Glassdoor, Indeed, and Careerbliss. There are also review sites for specific groups, including Fairygodboss, which is focused on women in the workforce. Searching LinkedIn may also reveal some reviews from current or former employees.

3. Talk to current employees

It's not a good idea to cold call people you don't know, but if you are friendly with people within the company, it's a great idea to pick their brain. Do they like working there? How would they describe the workplace culture? Is your potential supervisor someone you might enjoy working for? Your friends will likely put a positive spin on things if they like working there, but they'll also be happy to share any information that will help you succeed. Similarly, they will also let you know if they are unhappy. (See also: 10 Warning Signs Your New Boss May Be a Bad Boss)

4. Social media

Performing searches on Facebook, Instagram, and Twitter may reveal some details about a company. Employees may post updates on projects they are involved in, suggesting that they are proud of the work they are doing. You may come across photos of people at work functions, appearing to have a good time. The company may also post information about awards or promotions, indicating that they celebrate workers who are succeeding. On the flip side, you may come across workers venting their frustrations about the company or their boss. Be sure to take all complaints with a grain of salt, but if your social media searches reveal a barrage of negativity, be wary.

5. LinkedIn profiles of current and past employees

You can glean some details about a company by looking at the LinkedIn profiles of those who work there and those who worked there in the past. If the employees seemed to have long tenures in numerous roles with increasing responsibility, that's a good sign. But if it seems like workers don't last long, that could indicate a problem. (When scanning LinkedIn profiles, be sure to browse incognito so people don't know you are checking them out.)

6. The company website

Obviously, organizations work to make themselves look good online. The messaging on websites is usually designed to cast a positive image of the organization, its work, and its employees. But if you dig around, you can find a lot of objective information about workplace policies, such as 401(k) plans, health benefits, telecommuting options, and more. In addition, public companies are required to release financial information, so you can have a good sense of whether the company is doing well or not.

7. "Best Places to Work" lists

Many local and national publications produce annual lists of companies that have a good reputation among workers. These lists will celebrate organizations with above-average salaries and benefits, and highlight those firms with perks like free food, generous vacation policies, or flexible work schedules. These lists may not necessarily help you learn if you'll like your boss or the job itself, but you may be happier if the company finds itself on one of these lists.

8. News articles

When it comes to companies, sometimes no news is good news. It's one thing if your prospective employer is in the news for the successful launch of a new product, or for hiring 1,000 new workers at its headquarters. But if the company is in the news for poor handling of sexual harassment complaints, that's bad. News about mass layoffs, poor earnings, or changes in leadership may also be red flags, though it's important to know the difference between temporary, fixable problems and those that are indicative of larger issues.

9. The Better Business Bureau

The Better Business Bureau is designed to help consumers, but it can be useful for prospective employees, too. Most people would prefer to work for a company that has high marks for customer service, as opposed to one that gets a bad grade. Complaints received by the BBB can also help you glean whether there are systemic problems within the company. The BBB is geared toward offering information about contractors and charities. If your company does not have a BBB profile, that's neither good nor bad.

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This article is from Tim Lemke of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

7 Things You Should Know About Your 401(k) Match

Tim Lemke — Wed, 17 Jan 2018 09:30:05 +0000

If you are working and have access to a 401(k) plan from your employer, you may have heard references to a "company match" on contributions. What does this mean? It means that your employer is helping you save for retirement by matching the money you contribute, up to a certain amount.

These matching funds can be a very powerful way to save money over time, and it's important take advantage of a company's full 401(k) match if you can. Every company has different policies regarding these matching funds, and things can often be confusing for new investors. Here are some key things to know.

1. The match is free money

A 401(k) match is not a bonus based on your job performance. It's not a payment made in lieu of your salary. It's truly a contribution from your company to help you save for your retirement, which you can use to invest in a variety of mutual funds and other investments.

There's only one catch, which is that you need to direct a portion of your own money into the 401(k) plan first. That's why they call it a match. Some employers will automatically sign you up for the 401(k) plan and set aside a certain percentage of your salary as a contribution each pay period. (Don't worry — you can always adjust that amount.) If you are unclear on how much you should contribute to your 401(k), try to at least put aside enough to get the maximum company match. If you miss out on the full match, you are missing out on free cash that could add up to tens of thousands of dollars or more over time. (See also: How to Tell if Your 401K Is a Good or a Bad One)

2. Companies match differently

There is no standard or required way for employers to match 401(k) contributions. Some companies are very generous and match every dollar you contribute, no matter how much you put in. Others will match only a very small percentage. Matching contributions can change if a company is doing better or worse financially. When searching for a job, learning about a company's matching policy can help you decide whether you want to work there. Think of the 401(k) plan as part of a company's overall benefits package.

A company's match may also offer some insight into the overall health of the firm. If a company recently stopped matching contributions, that's a red flag that the company may be in trouble.

3. There is often a "vesting" period

Many employers will begin matching contributions as soon as you begin working there, but you may have to give back those matching funds if you leave the company after a specific time. For example, if you've been setting aside 5 percent of your salary into your 401(k) and your company is matching that, you don't necessarily get to keep the company's contributions right away. You may have to wait one year, three years, or even longer to keep that money permanently. This is called a vesting period.

About half of employers offer immediate vesting, according to one Vanguard survey. But others have different vesting schedules. Some will allow you to keep a portion of company contributions after a certain amount of time, and increase that total annually until you are fully vested. (Example: 20 percent vested in year one, 40 percent vested in year two, etc.)

Vesting schedules and policies can be confusing and can change, so be sure to read your 401(k) plan documents carefully. And if your company does have a vesting period for its 401(k) match, try to avoid leaving before that time is up, as doing so could result in you forfeiting thousands of dollars plus any future investment gains. (See also: 8 Critical 401(k) Questions You Need to Ask Your Employer)

4. Contribute more, get more

Here's a brain teaser for you: If Company A makes a dollar-for-dollar match on all employee contributions up to 4 percent, and Company B matches contributions up to 8 percent at 50 cents on the dollar, which company is contributing more?

The answer is that they are both contributing the same amount. The difference, however, is that Company B is using its matching funds to incentivize workers to contribute more of their own money. If you take advantage of Company B's full match, you will have more money in total because your own contribution will be higher. Contributing more yourself will also save you money because those funds are deducted from your taxable income.

5. Matching money doesn't count against contribution limits

The IRS places a limit on the amount of money you can contribute to a 401(k) each year. For 2018, that limit will be $18,500. It's important to note that this limit only applies to money that the individual contributes. Money from the company match does not count against this total. Thus, the total amount of money from all sources going into your 401(k) each year could be much more than the IRS limit. Feel free to contribute as much as you can, take advantage of the full company match, and watch your savings grow. (See also: 6 Ways Meeting the 2018 401(k) Contribution Limits Will Brighten Your Future)

6. Sometimes the match comes as company stock

In some cases, employers will contribute all or part of a 401(k) match in the form of company stock. While free company stock is better than nothing, it's risky to have it comprise too much of your savings. Your employer already pays your salary, so your financial security is already tied to the company's success. Past employees of Enron and other failed companies can attest to the risk of having too much of their savings tied up in company stock.

If you receive company stock in your retirement plan, consider adjusting your investment mix so company stock doesn't comprise more than 5 to 10 percent of your portfolio. (See also: 7 Things You Need to Know About Investing in Company Stock)

7. It doesn't pay to front load your contributions

Let's say it's January and you just got a big pay raise, a bonus, or both. You may be tempted to throw as much money as you can into your 401(k) at that point. If your employer matches based on pay period, you may miss out on matching funds if you max out your contributions early.

So for example: Let's say you earn $200,000 annually and choose to set aside 30 percent of your income per month in the first few months of the year. And let's say your company matches all contributions up to 5 percent of your salary per pay period. Under this scenario, you will have maxed out your contributions by April and won't be able to contribute any more for the rest of the year. Meanwhile, your employer has only contributed up to the maximum company match for those first few months. In this case, your company will have put in about $3,332 when you would have received $10,000 in matching funds if you had spread the contributions out.

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This article is from Tim Lemke of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Don't Let These 6 Common Job Traps Derail Your Career

Kentin Waits — Mon, 26 Jun 2017 09:00:12 +0000

Have you run out of novel reasons to call in late to work? Do you keep close tabs on the number of vacation and sick days you have left? Have you fantasized about pulling a Thelma and Louise-style getaway on your Monday morning commute? If so, you may feel trapped by that job you used to love.

It's no fun. Feeling trapped in a job you hate can sap your motivation, keep you poor, and lead to all kinds of other stress. Get yourself unstuck by learning why so many people get stuck in the first place. Here a six of the most common career traps.

1. Convincing yourself you're too invested to leave

Being invested in your job is admirable, but at a certain point, the law of diminishing returns kicks in. Ask yourself, "Is my investment paying off? Is the payoff purely financial? Are there hidden costs to my health and relationships that I'm not factoring into the equation?" Consider how moving on might revitalize your career and offer greater rewards. (See also: 6 Reasons It's Never Too Late for a Career Change)

2. Believing that big promotion is just around the corner

I get it; we're all taught that quitting is bad and that patience is rewarded. But if you're continually passed over for promotions despite working harder and working smarter, something's gotta give. Have a chat with your supervisor to clarify your career path and outline exactly what's needed to progress professionally. If things don't change in a reasonable amount of time, move on. (See also: 12 Ways to Finally Get That Promotion This Year)

3. Confusing your employer with your family

We've all heard the familiar refrain, "We're just one big happy family here!" While the metaphor is lovely, it usually doesn't survive an economic downturn. Without taking anything away from companies that work hard to foster a close and collaborative atmosphere, the employer/employee relationship is an economic one. Your coworkers aren't your siblings and your boss isn't your parent. Pursue your career goals free of these false family obligations.

4. Not realizing you can interview casually

An interview is like a first date; even if things go well, you don't have to get married. There's a big difference between exploring your professional options and turning in a letter of resignation. Chill out. It's perfectly OK to interview casually, learn more about companies that are hiring, and take your time considering new roles. (See also: 9 Ways to Job Hunt Without Getting Caught)

5. Waiting to cash in when the company goes public

Sure, sometimes companies go public and faithful employees get a big payday by exercising company stock options. But just as often, companies spend years preparing for an IPO that either never happens or falls flat. Unless you're fully prepared to play the long game — potentially sacrificing career advancement and happiness in the process — don't stick around for an iffy IPO.

6. Believing your employer is special

I once had a friend who spent more than 25 years working for the same company. The first five or 10 years were terrific. The firm was small and privately held, provided employees with free lunch every day, and offered a host of convenient services on-site. But when the company went public and had to answer to shareholders, the culture changed dramatically and most of those little perks were cut.

Still, my friend endured. She had a difficult time admitting the place was no longer special — that other employers might actually offer her more valuable benefits and far more progressive work environments. For the next decade, she toiled as new staff came and went, her workload grew, and her stress level skyrocketed. Though she dreamed of moving on, she's likely still there — holed up in a dark corner remembering the good ol' days.

That doesn't have to be you. Let go of what used to be special and move on to something that is.

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This article is from Kentin Waits of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

7 Things Employers Care About More Than Your Degree

Paul Michael — Fri, 12 May 2017 08:30:07 +0000

A college education is a wonderful asset. You get a foundation on which you can build a great career, life experiences, and friendships that can last a lifetime. However, a degree is not the be-all and end-all of what makes you an ideal job candidate. Employers are looking for other key factors that separate you from the crowd.

1. Hands-on experience

There is a world of difference between college experience and real world experience. As it was so profoundly put in The Secret of my Success, it comes down to this: "What you've got is college experience, not the practical, hard-nosed business experience we're looking for."

Education is great, but it doesn't compare to being in the trenches, and employers know that. If you've got years of experience under your belt, it can often take the place of a degree or other form of education. And, it means you have references from people in the industry. This is by far the best way to separate yourself from the competition.

2. Ability to solve problems

It doesn't matter whether you have an office job, work in a garage, or are out in the fields every day. Whatever your chosen career, you are going to encounter problems; it's a daily part of every job. How you handle those situations will hold you in good stead, and problem solvers are highly prized.

Do you think laterally? Can you condense the problem into key issues that should be addressed? Do you take charge when faced with a challenge? If you can hold your head up high and demonstrate your ability to solve problems quickly and effectively, your future employer will find you very hirable.

3. Communication skills

Directly related to problem solving, how well you communicate can be just as important as what you're communicating. It's no good having a great solution to a problem if you're afraid to speak up, or find yourself unable to distill your thoughts into actionable directions. Someone who can communicate well, and in a way that motivates and produces results, is a great asset to any employer.

4. Collaboration skills

Loners tend not to do well in most jobs. Sure, there are a few exceptions here or there, but for the most part, you must be able to work well as part of a team. In fact, one of the keywords you'll see most frequently listed in job postings is "team player." Employers want candidates who can quickly and easily become part of a team, even if individuals in the group have clear differences. A candidate that can put aside those differences to produce a great team effort is worth their weight in gold.

5. Work-related achievements

Think about what achievements you can use as a plus during your application and hiring process. Have you written a successful blog or book about the industry? Are you a guest speaker at industry-related events? Have you appeared on television or radio? Have you won any industry awards?

Any and all of these things can go a long way to getting you hired, and are often far more valuable than a degree. It shows that you know your stuff and know it well. Don't be afraid to list your achievements, even if they're not directly related to the job. They still count, and they have cachet.

6. Volunteer work

Charitable endeavors can do a lot to highlight the kind of person you are, and employers love seeing this on a resume. First and foremost, it's a sacrifice of personal time to do something for the greater good, and that says a lot about your character. The kinds of charities you work for can also sway the employer even more.

For example, while volunteering at an animal shelter is great, helping people in need, like military veterans, will hold a little more value. How long you have been volunteering is also important. If you have been at it for 10 years, despite a poor economy and changing jobs a few times, it shows real dedication. And of course, you will get excellent references from anywhere you volunteer for, which leads to the final point.

7. Awesome references

The old saying "It's not what you know, it's who you know" is directly applicable to your career. In fact, many people climb the corporate ladder with great speed due to knowing the right people, regardless of skills or accomplishments.

For example, let's say you're in the film industry, and you have no formal education in video production, editing, sound, or any of the other required skills. The employer will obviously overlook all of that if you have a reference from Steven Spielberg, Ron Howard, or Martin Scorsese. This is, of course, an extreme example. But if you have references from well-respected professionals in the industry, you're golden.

When it comes to getting a job, you need to use every advantage you have; especially if you do not have the "right" kind of education for the position. But if you're smart and inventive, you can still get the job without the diploma. Good luck.

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This article is from Paul Michael of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Your 401K in 2017: Here's What's New for You

Matt Bell — Mon, 20 Feb 2017 10:00:11 +0000

There aren't many 401K rule changes to keep up with this year, but that doesn't mean you can't bring about some of your own positive changes to your retirement savings. Let's take a look at what you need to know to make the most of your 401K in 2017.

No Changes in the Contribution Limits

The amount the IRS allows you to contribute to a 401K plan this year remains as it was last year — $18,000 if you're younger than 50, or $24,000 if you're older. However, the Feds did make two changes to the retirement savings landscape, which pertain to people on either end of the income spectrum.

1. More May Qualify for the Saver's Credit

Low and middle-income earners should be aware of the Saver's Credit, a tax benefit that rewards those who save for their later years through a 401K or IRA. Depending on your income and filing status, the credit is worth 10%, 20%, or 50% of up to $2,000 of contributions per person (for married couples, that means up to $4,000 of contributions).

Married couples filing joint returns can claim at least a 10% credit as long as their adjusted gross income (AGI) is no more than $62,000. That maximum income amount is $500 more than in 2016, so more households should qualify. However, the most generous 50% credit is allowed only for those couples making no more than $37,000 — the same threshold as in 2016.

The credit/income limits for married couples filing jointly are:

50% if AGI is $37,000 or less
20% if AGI is $37,001–$40,000
10% if AGI is $40,001–$62,000

For singles, or married couples filing separate returns, the maximum amount you can earn and still qualify for a credit is $31,000, which is $250 higher than in 2016. In order to qualify for the maximum 50% credit, your income has to be no higher than $18,500.

Here are the details:

50% if AGI is $18,500 or less
20% if AGI is $18,501–$20,000
10% if AGI is $20,001–$31,000

Keep in mind, a tax credit is much more valuable than a tax deduction because it is a dollar for dollar reduction of taxes.

2. Higher-Income Earners May Get More

On the other end of the income spectrum, the IRS expanded the contribution parameters pertaining to the retirement plans of well-paid workers. For example, contributions — by the employee and/or his or her employer — are limited by how much an employee is paid in total. In 2017, the amount of compensation on which contribution amounts can be based was increased by $5,000 to $270,000, and the maximum total contribution amount was bumped up by $1,000 to $54,000.

What Changes Will You Make?

Even if the two changes noted above don't pertain to you, that doesn't mean you need to — or should — stay the course with your retirement savings. The start of a new year is a good time to re-evaluate your goals and see if you're on track.

Here are two areas to review.

1. How Much You Need

Do you know how much you should have saved by the time you retire? Do you know how much that means you should be saving each month right now? If not, take a few minutes to run some numbers. If you're not saving enough, consider increasing your contributions.

2. How You Should Allocate

Do you know your optimal asset allocation? That pertains to how much of your investment portfolio should be in stocks, and how much in bonds (or stock and bond mutual funds). Vanguard offers a well-designed, free asset allocation questionnaire, so give it a try. Then try to bring your portfolio more in line with your optimal asset allocation.

While tax credits and employer contributions are significant benefits, the most important factors that determine your investing success are the amount of money you save each month, and whether your asset allocation is appropriate for someone of your age and risk tolerance. Take the time to evaluate your individual retirement savings scenario, and see how you can make it even better for 2017.

This article is from Matt Bell of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

15 Questions You Should Always Ask at the End of a Job Interview

Paul Michael — Tue, 07 Feb 2017 11:00:09 +0000

There are two important moments that occur in every job interview — the first impression, and the last. The first impression is about instantly portraying a positive image of yourself to the interviewer. You want to be confident, personable, and eager to talk. By the time the interview is over, you will have relaxed, and will hopefully have a rapport with the other person. This is the time to hit them with some questions that can be enlightening, and leave things on a lasting, positive end note.

1. "Why Is the Person I am Replacing Leaving the Company?"

This question can be considered quite assertive, but it's definitely fair game. If you are filling the shoes of someone else, you want to know why they are leaving. Maybe they got a promotion. Perhaps they were headhunted. Or, they may have hated the job, the people, and the hours so much, they quit. The interviewer may not be as open to answering this if it's the latter, but the reaction on their face, and any hesitation in answering, can speak volumes.

2. "What Would a Current Employee Say About This Position?"

You could always ask them directly (and that's not a bad idea at all… reach out on sites like LinkedIn and Facebook). But in this situation, you can find out how the interviewer reacts to that question. A grimace or raised eyebrows gives away the probability that although the interviewer has talked a good game, the job may not be all it's cracked up to be.

3. "What's the Corporate Culture Like Here?

Is this an environment of backstabbing and name-calling? Do you have to really flatter egos and go the extra mile to get a promotion or a raise? Will your political leanings be looked upon unfavorably? (Some people have been let go due to Facebook and Twitter posts.) Is the atmosphere relaxed, or uptight? You need to know before you sign.

4. "What are the Main Challenges That the Company, and My Department, Are Facing Right Now?

This is a doozy after rounds of questions from the interviewer. You are showing an interest in the issues that you will want to help solve, and you can also gauge the reaction of the person sitting opposite of you. Hopefully, they will be open, honest, and engage in the answer. If they can't think of any, you may want to run and hide. Every company has issues…denying their existence is a red flag of an oppressive corporate culture.

5. "If I Get the Job, What Will Be My First Major Assignment or Goal?"

This shows your eagerness to dive into the role, and gives you fair warning of what your first few weeks, or months, on the job will look like. It may also be a red flag for you that you're about to bite off way more than you can chew, or that the company doesn't entirely understand the role for which you're being hired.

6. "What Qualities Does Your Ideal Candidate Possess?"

Basically — am I the person you had in mind? Of course, you don't ever want to come out and say that. By asking it this way, you can weigh up your own strengths and weaknesses and get a good temperature reading on your chances of success. Oh, and if he or she says, "Actually, you have them all" then you're probably a shoo-in for the job.

7. "What Does Success Look Like for My Particular Role?"

This will vary drastically depending on the company, and the job itself. For some jobs, success comes directly from sales results or hitting hard financial goals. In other jobs, success is based more on your creative output, or how you help raise the company profile. Get to know the parameters for success, so you can meet them and move upward.

8. "Name One Thing You Like, and Don't Like, About Working Here."

The first part of this question is easy. It's a softball to set the interviewer up for the real question: What's not so good about life at your company? They may well be reluctant to answer. They could say something trite, like "Sometimes the people are too nice." But hopefully, you'll get an honest answer. The hours can be long. The work is very challenging. This will give you more meat to contemplate the role you will be filling.

9. "Which of Your Competitors Do You Look Up to, and Why?"

Make no mistake, every company should be looking at their rivals. If you're Pepsi, you take note of everything Coke is doing. If you're Avis, you look at Hertz. How the interviewer answers gives you a good indication of their competitive spirit, and what they are doing to either stay on top, or become a bigger player. There's nothing wrong with admiring a rival; if the interviewer doesn't think anyone is worth his or her respect, this could reflect a narcissistic company culture.

10. "What Are the Opportunities for Growth and Training in This Role?"

Does the company offer help with expenses for further education? Can you expect to climb the ladder quickly, if you meet and exceed your duties? Is the job a dead end, with few chances of advancement? Find out now, before you say yes to a role that could be career suicide.

11. "Is There Anything You Haven't Told Me About the Job That I Should Know?"

This one catches a lot of interviewers off-guard. Many will "um" and "ah" and come back with "Not that I'm aware of." But it's worth asking, because sometimes you get an insight or confession that would not have been presented unless you probed in this manner.

12. "Does the Company Have a History of Layoffs and/or High Turnover?"

You may be able to get some of this information from sites like LinkedIn and Glassdoor, or by Googling articles on the company. But many times, this kind of information is just not out there. You might get stonewalled here, but you could also get an honest answer. Yes, the company does lay off people for certain reasons, and yes, the turnover is high because many people cannot handle the pace, or the hours.

13. "Is There Anything About My Resume or Experience That Causes Concern?"

Find out what your weaknesses are now, and change the interviewer's opinion if you can. Perhaps they don't see a certain skill listed. You can reply that you are taking courses on that and will be up to speed in weeks. This is your chance to remove doubt from the interviewer's mind, and it also makes you look humble and eager to improve.

14. "Why Did You Decide to Work Here?"

This is a more cunning way of asking about the pros (and maybe cons) of working at the company. It prompts the interviewer to bring in personal experience, and may give you some unique insights into the job, the company, and the competitive landscape.

15. "When Can I Expect to Hear Back From You?"

Finally, you should set expectations for yourself on when you will hear from the company, good or bad, about the position. If the interview process is in its infancy, and there are many candidates to consider, it could take weeks for a decision to be made. On the other hand, you could get a call within a few days. It's important to know this so that you do not harass the recruiter too early. It also gives you a timeline for sending a follow up card or email.

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This article is from Paul Michael of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Why Your Group Life Insurance Is Not Enough

Ashley Eneriz — Tue, 31 Jan 2017 11:00:10 +0000

You've done it — you've finally landed a job that offers amazing benefits such as free life insurance. While employer-offered life insurance (also called group life insurance) is worthwhile, it shouldn't be your only source of insurance.

How Do I Get Group Life Insurance?

Many employers will offer a free level of life insurance for employees. Depending on your place of work, this can cover anywhere from $25,000 to your base pay. Since this is a free option, all employees should sign up for the benefit. It's free money if something were to happen to you. However, don't let that be your only coverage. (See also: 5 Reasons Why Life Insurance Isn't Just for Old People)

Is Group Life Insurance Enough?

If you are single, a $25K —$50K check sounds like a nice chunk of change for your parents or other loved ones you leave behind. However, in most cases — yes, even for single people — it's simply not enough. Final expenses can be greater than you think. Funerals can range in price, but a recent survey by the National Funeral Directors Association found a median price of $7K.

Furthermore, if your private student loans, mortgage, or car loans have a co-signer, then that co-signer will be stuck with your debt after you die. To avoid this, you can either remove co-signers from loans through refinancing, or purchase term life insurance that will cover the cost of your remaining debt.

For healthy, young individuals that do not need much coverage, term life insurance rates are very affordable, with some policies costing less than $20 a month. But for individuals who are married and/or have children, you'll likely need more coverage, To calculate how much coverage you need, add up the following:

Funeral cost;
Cost of paying off any debt not forgiven upon death;
Time you want your loved ones to have income and not worry about work — for example, even if your spouse works full-time in a successful career, they might need several months to grieve your loss;
Future college costs or other child-rearing expenses.

For many families, the total will be around seven to 10 times your annual paycheck.

Can I Get Supplemental Life Insurance Through an Employer?

Many employers will offer supplemental life insurance for purchase. Since you are purchasing the policy through your employer, it could be slightly cheaper than purchasing individual life insurance. However, your company technically owns the policy. Therefore, if you quit or are fired, your group life is gone, too. Some employers will give you the option to continue carrying the policy after you leave, but it will be at a higher price.

Individual Life Insurance Versus Group Life Insurance

While signing up for free group life insurance is a must, it is much better to sign up for supplemental term life insurance individually. The policy will stay with you even if you move jobs. Furthermore, you can lock in a low premium now when you are still young and healthy.

Say you were to secure a low-cost policy with your employer's group life insurance at the young age of 25. Your rates should be quite low. Now fast forward eight years. You want to quit your job and have your own term life insurance policy. You will still get a great rate because you are under 40, but your monthly premium will be more at 33 than it was at 25.

To sum it all up, cash in on your employer's free group life insurance perk, but also secure term life insurance when you are still young. This will allow you to lock in the best rate possible.

This article is from Ashley Eneriz of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

8 Warning Signs You're Going to Bomb Your Job Interview

Paul Michael — Wed, 25 Jan 2017 10:00:08 +0000

If you have a job interview coming up, you will no doubt be preparing for it. Depending on the type of industry you are in, that could mean refreshing a portfolio, getting a haircut, and warning friends and colleagues that they may be called to give you a reference.

However, even with all that in the bag, you could be walking into a potential interview failure. If any of the following warning signs hit close to home, you should correct them before you ever step foot in that interview room.

1. Your Social Media Accounts Are Filled With Problems

We live our lives in public. Employers know this, and as such they now comb through social media accounts of potential employees, looking for reasons not to hire you. Any inappropriate photos will not bode well for you. If you are very political, one way or the other, it could be a black mark against your name. If you slag off your current, or previous, employer, that will make you appear difficult and dangerous. If your posts are filled with spelling errors, that could also cross you off the list.

Social media accounts can lead to you failing the interview before the first question is even asked. Comb through them carefully, and delete anything you think could be an issue. If you see something that makes you cringe, or would make you embarrassed to show the interviewer, get rid of it. We may have freedom of speech, but that doesn't stop the employer from using it against you.

2. Your Resume Is Not Current

One of the best habits to get into when you're employed is regularly updating your resume and/or portfolio. Not only does it benefit you when posted on sites like LinkedIn and Krop, but it also gives you a regular gut-check on how your career is progressing (or not). If you have had three promotions in the last five years, those need to be on your resume. If you have taken on much greater responsibilities, put those down. If you landed a big new account, or helped the company make the local news, find a way to work all that in.

A stale resume signals to a prospective employer that you are lazy, uninterested, or disorganized. And you do not want the interviewer to think you are anything but a great addition to his or her team. Look at your resume right now, and if it's even a little dated, fix it.

3. You Know You'll Nail It

Confidence is good. Arrogance, not so much. While you should definitely believe in yourself, your achievements, and your abilities, you cannot afford to think that this job is already in the bag. That kind of cocky attitude can easily lead to your downfall. It can prevent you from doing the requisite preparation, and you may not ask yourself the tough questions that the interviewer will definitely fire at you.

Of course, you don't want to let too much doubt slip in, because that can be just as damaging. Think of this like the time you first met the parents of your longtime partner. You hope they'll really like you, and you're going to do everything to make sure they see the real you without coming across as God's gift. Hubris has no place in your life before this meeting, and the same goes for the interview.

4. You Can't Wait to Dump on Your Current Employer

Big mistake. You may feel like they don't appreciate you, or hate the fact that you've gone without a raise or promotion for the last five years. You may also despise the boss, your coworkers, and the product or service offered by the company itself. You can feel the need to unload just rising up inside of you. But the absolute worst thing you can do is unburden yourself in the interview. You will sound bitter, hostile, and show your prospective employer that you have very little loyalty or respect.

The interviewer will think you to be a challenge, and you may well turn that same hatred on any company that hires you. Why take the chance? If you have to let it all out, tell a friend or relative. Write it down in a letter (even addressing it to your current boss… but don't mail it, obviously) and exorcise those demons. If the interviewer asks about your current employer, talk openly about some of the challenges you have faced, but in a very positive way.

5. Your Interview Is Near the End of the Day

Uh oh. If you're being asked to come in late in the day, chances are you are going to have a bad time. People who have been interviewing candidates all day are tired, irritable, and have often already seen the person they want for the job. They have had to endure hour after hour of the same kinds of answers, and may well have been knocked out by someone you now have to follow. All in all, the last interview of the day is a slot that can really work against you.

Now, some people say it can be beneficial. Being the last person means you will be freshest in the mind of the interviewer, and that gives you a better chance to stand out and make the cut. This is a myth. Most interviewers schedule the candidates they are interested in for the earlier time slots. If your resume and cover letter knocked them out, you would not be given this slot… unless, of course, it is the only time you can make it. But realistically, you should be doing your best to work around the employer's schedule, not vice-versa.

6. You Don't Know Enough About the Company

A big part of your preparation for the interview should be about the company itself. You need to know whom you are going to work for, what the company has been doing over the last few years (or longer), and what the marketplace is like. Who are its biggest competitors? Has it had any major breakthroughs recently? Has it made the news, for good or bad reasons? Does it have a reputation for laying off employees, or paying below the industry average?

If you are going to an interview soon and cannot answer any of these questions, you are not going to do well. And, you can't wing it, either. Get your research done. Use Glassdoor to search what people are saying about the working conditions. Google the company name, and see what comes up under "news" or "videos." A site like Reddit may even have a subreddit devoted to it (think Apple or Microsoft, for example). Do your homework, and you will be in a much greater position in the interview. You'll also know what to ask for when it comes to salary, benefits, and perks.

7. You Don't Have Any Questions Prepared

An interview is not a one-way street. Your interviewer will start the ball rolling with a whole lot of questions, probing to see if you're the right candidate for the job. They will be watching everything you do, writing down positives and negatives, and will be eyeing-up your personality, too. But they also want you to ask some questions, as well.

They want to know that you're interested in the position, the company, the benefits, and the opportunities for growth. They may well prompt you by saying, "Is there anything you'd like to know?" or "What questions do you have for me?" If you don't have some zingers ready, something that really shows your passion for working at the company, you will come across as blasé or going through the motions. That is not a good impression to leave with anyone.

8. You Haven't Thought About Your Outfit

From the moment you step into the office or meeting room where the interview takes place, you are being judged. How you walk, how you greet the interviewer, and how you dress are all being evaluated. What you wear, and how you wear it, can have a huge impact on that vital first impression.

It also varies greatly depending on the type of job you're going for. If you're in a very creative industry, such as graphic design, advertising, music, filmmaking, or beauty, you will probably want to look just as creative. A stale suit and tie will make the opposite impression, and even though you may be a creative genius, you will look like an accountant or sales person.

That doesn't mean sloppy; it should be put together with care, even if it's a pair of designer jeans and a T-shirt. Similarly, that very same outfit would be a disaster for an industry that expects formal clothing. Banking, finance, medicine, law — they would consider you sloppy if you wear anything other than a well-tailored suit or equally professional outfit. If you still don't know what to wear, get some advice from people who work at that company.

Don't waste an opportunity like a job interview by slipping up on these simple things. Be prepared in order to give yourself the best chance possible at achieving your career goals.

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This article is from Paul Michael of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Great Retail Jobs for Working Parents

Amanda Meadows — Thu, 01 Dec 2016 11:30:11 +0000

'Tis the season, as in, the 4th quarter of the calendar year! That magical time when seasonal retail employees are needed the most, and hired en masse to meet the demand from Black Friday through January. If you have kids, try these five great retail gigs for working parents.

1. Patagonia

The best retailer for working parents could very well be Patagonia, the clothing and gear brand beloved by trekkers and puffy-vest fans everywhere. Why? They have free on-site child care for employees. You read that right! This also means that 100% of employees return to their post after their maternity leave.

So how do you climb your way into that gig? Well, it's not so much a seasonal gig as it is a job in their headquarters, which is in Ventura, CA. Not such a bad relocation, though.

2. Lands' End

In similar step with Patagonia, another purveyor of outdoorsy goods Lands' End also provides lots of benefits to workers. In addition to many citing its company culture as safe, fair, and open, they also boast some competitive benefits, including: health insurance, 401K, subsidized on-site food services, a wellness center –– all great benefits for parents. Time to apply for a position now!

3. Wegmans

That's right, the supermarket chain known across the East Coast for great food and service is also a great employer. Wegmans is number four on the Best Companies to Work For list in 2016.

Why are they so great? Wegmans covers 85%-100% of employees' and their dependents health insurance. Many employees are even offered dental insurance. Plus, if you're a college student, they help pay your tuition. If you live in the Northeast and are looking for a job, this would be a good one. Plus, they make really delicious doughnuts.

4. Staples

Need a chain store with more locations, and most likely to be near your home? Staples is a very good option.

Staples employees get an Aetna health insurance plan for a deduction of $30 per paycheck, or $60 for those with dependents. Workers also get short-term disability insurance, and access to a service that can pair them with financial services and child care. Not too shabby!

5. Costco

If it wasn't already hard to avoid spending money at Costco, everyone's favorite bulk-everything retailer is also famously good to its employees. Employee perks for America's second-largest retailer include: choosing your own health plan if you work over 24 hours per week, a 401K plan, an FSA account to use pretax income for child care, and an employee care program that includes access to mental health, and financial professionals.

This article is from Amanda Meadows of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

7 Skills Today's Employers Value Most

Mikey Rox — Mon, 07 Nov 2016 09:30:11 +0000

A college degree can increase your chances of getting a job, but sometimes it takes more than education to impress employers. Personally, when I’m hiring for my own business, I look beyond the degree and even the resume to find a candidate whose actual talent make them worth the money I’m going to spend on them. Likewise, you also need to possess sought-after skills — the kind that keep the direct-deposit flowing straight to your bank account — which you may or may not have learned in college. Enhance your chances of climbing the corporate ladder with these seven skills employers value most.

1. Written Communication Skills

Effective verbal communication skills are practically a necessity with any type of job. You'll speak with customers, clients, coworkers, and your employer. The ability to express yourself in a clear, concise manner is key to getting your thoughts across and lessening the likelihood of miscommunication.

But you need more than verbal communication skills to get the job done. Some positions also require excellent writing skills for drafting emails, memos, and reports. You'll need strong written skills to get your points across on paper and communicate your message with clarity. In addition, technology plays a big role in business with many companies taking their brand online. If you can demonstrate good written skills and produce error-free copy, there could be opportunities to assist the marketing team with blog posting, article writing, and social media marketing.

2. Time-Management Skills

To make it in a fast-paced environment, you need superior time management skills, and depending on the nature of your job, you might constantly deal with a pile of work and tight deadlines. If you can't prioritize, you'll fall behind and slow down productivity for the entire office. Employers value someone who has the ability to multitask and work quickly, but efficiently. Your employer can't afford for you to spend too much time on a single task.

3. Tolerance for High Stress Situations

It doesn't matter where you work or what you do, just about every job has its stressful periods. When the going gets tough, the last thing employers need is someone who crumbles under pressure. Rather, they're looking for someone who can perform under harsh conditions without jeopardizing the quality of their work. This doesn't mean you should stick with a job that tests your patience or affects your health in a negative way — your job isn't supposed to drive you insane — but there's value in demonstrating mental strength to tackle and deal with occasional stressful elements of your job without missing a beat.

4. Creative Thinking

A company has to evolve from time to time to keep up with their competition and to give customers what they need and want. Company heads generally take the lead in generating new ideas, but they often welcome suggestions from their staff. If you're a creative thinker who isn't afraid to take the initiative and share your ideas and solutions, you'll become an integral part of the team and contribute to the company's growth. Some of your suggestions could be ideas your superiors never considered. A creative mind paves the way for a position with greater responsibility.

5. Flexibility

As a company evolves, it's also important for its employees to adapt to change as the climate or situation at work may not stay the same forever. Management can make new decisions and implement new strategies for the betterment of the organization. For the company to move in the right direction, employers rely on their team's support, and they need flexible employees who can successfully adjust to changes in the situation.

6. Ability to Work in Teams

Some people prefer working alone. But when you join an organization, you become part of a team. Employers value those who have the ability to work in a group and collaborate with minimum disagreements or tension. Teamwork is essential because this is how a company establishes new ideas and solves problems. Two heads are better than one, after all. Therefore, some employers seek candidates who understand the importance of a team-oriented metric, and who are willing to work together to achieve the company's main goals.

7. Staying Motivated

It's your employer's responsibility to provide feedback and monitor your performance. But since you're not the only employee at the company, your boss can't hold your hand through every task. Being able to work on your own initiative without direct supervision is an asset employers value.

Although you shouldn't overstep boundaries or come off as presumptuous, your employer may appreciate your resourcefulness with an ability to identify problems, come up with practical solutions, and decide the best course of action within your limits. Employers have a lot on their plates and they need workers who can consistently perform independently with minimum supervision.

This article is from Mikey Rox of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

New Job? Don't Make These 7 Mistakes With Your Benefits

Damian Davila — Mon, 31 Oct 2016 10:00:07 +0000

In September 2016, total nonfarm payroll employment in the U.S. rose by 156,000. If you were among those Americans who recently landed a new gig — or plan on landing one within the near future — congratulations! But as you get your benefits and retirement planning set up at your new workplace, don't make these seven mistakes.

1. Not Setting Up Your New Retirement Account Before December 31st

Make to sure to set up your new employer-sponsored retirement account before December 31st. Otherwise, you won't be able to reduce your 2016 taxable income by making contributions before Tax Day (April 17th, 2017) or the day you file your federal tax return, whichever is earlier. If you wait until the new year to set up your retirement account, any contributions made before Tax Day will reduce your 2017 taxable income — and you'll lose the opportunity to reduce your 2016 AGI (Adjusted Gross Income) by any contributed amount.

2. Not Completing a 401K or IRA Indirect Rollover

If you had a balance of less than $5,000 in your previous job's 401K or IRA plan, there is a good chance that you received an automatic cashout with a 20% withholding from your employer for applicable taxes. From the last day of your employment, you have 60 days to put the entire balance of the previous retirement account (including the mentioned 20% withholding!) into a new employer-sponsored retirement account that accepts rollovers. This process is known as an indirect rollover.

You'll get that 20% withholding money back from the IRS in next year's tax return. In the event that your new employer's retirement account doesn't accept a rollover from your previous account, consider opening an IRA with a local financial institution before the 60-day deadline. (See also: A Simple Guide to Rolling Over All of Your 401Ks and IRAs)

3. Leaving W-4 Forms Alone

Depending on a variety of factors, your old W-4 tax withholdings may not cut it at your new gig. To figure out whether you're withholding too much (or too little), grab all of your latest pay stubs, find a copy of last year's tax return, and visit the online IRS Withholding Calculator.

After punching in your data, this tool will provide recommendations on how to adjust your W-4 with your new employer to make sure that you meet your tax liability and minimize your refund. There's no sense in over-withholding and expecting a large refund, since the IRS doesn't pay interest while it sits on excess withholdings. That's money better kept in a savings or retirement account, where it can gain interest and compound over time.

4. Missing the Deadline to Make an Additional Estimated Tax Payment

If the IRS Withholding Calculator were to tell you that you're seriously behind your tax liability, you'll probably need to make amends pronto, lest you end up owing Uncle Sam at tax time. It's to your benefit to make an additional estimated tax payment to reduce or eliminate such a liability. For example, in the event that you know that there is an end-of-year bonus or commission check arriving before January 17, 2017, you have the option to use part of that check to make an estimated tax payment with Form 1040-ES.

Make sure to use the IRS Withholding Calculator to estimate the right amount to mail to the IRS with Form 1040-ES and keep a photocopy of both the form and check for your own records.

5. Not Enrolling in a New FSA Plan Within 30 Days

You have up to 30 days from your hire date to enroll in an employer's flexible spending account (FSA). If you miss that deadline, you'll have to wait until your company renews its FSA plan, your plan administrator announces an open enrollment period, or you have a qualifying life event, such as changing marital status or having a baby.

6. Forgetting About Balances in Previous FSA Accounts

You may be so busy training at your new job and completing paperwork that you forget about remaining benefits at your previous employer. Check the rules from your previous FSA account regarding the expiration date of available money once you separate from your old employer. Most FSA plans provide a grace period to use the money, but some of those deadlines may be as early as the end of the month in which you separate from your employer. Unless you use your FSA funds in full by the applicable deadline, you'll lose them all.

7. Going More Than Two Months Without Health Coverage

As you're transitioning from one job to the other, keep an eye on the start and end dates of previous and current health plans. Under the Affordable Care Act (ACA), better known as Obamacare, you owe a fee for any period greater than two months in which you, your spouse, or your tax dependents don't have qualifying health coverage. In most cases, the penalty fee is 1/12 per month of 2.5% of your household income or $695 per adult, whichever is higher.

Being uncovered for only one to two months, qualifies you for a short gap exemption and you're not liable for the fee. Find out whether or not you're able to claim a health coverage exemption with HealthCare.gov's Exemption Screener.

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This article is from Damian Davila of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Financial Reasons Paid Parental Leave Is Essential for Moms and Dads

Emily Guy Birken — Wed, 20 Jul 2016 09:00:13 +0000

The United States is one of only two countries in the world that does not offer guaranteed family leave for new parents — the other one being Papua New Guinea.

The U.S. isn't completely without family leave policy, of course. The Family Medical Leave Act (FMLA) of 1993 guarantees that eligible workers can take up to 12 weeks of unpaid leave for a new baby or adoption (or to care for an ailing family member) without it affecting their employment. But only about 60% of American workers meet FMLA eligibility requirements, and even those who do might not be able to afford to take 12 weeks off without a paycheck.

There are a couple of deeply entrenched economic beliefs behind America's lack of paid parental leave: First, that companies cannot afford (and should not have to afford) the cost of paying an employee who is not working, and second, that having children is an individual choice that does not (and should not) affect society financially.

But the truth is that both of those economic beliefs are just that — beliefs. In reality, we are shortchanging ourselves as a country by not offering paid parental leave. Here are the five most important financial reasons why paid parental leave is essential. (See also: 6 Best Jobs for Working Moms and Dads)

Paid Parental Leave Costs Companies Less Than Turnover

It seems like a pretty simple economic truth: An employee is only valuable to a company if he or she is producing work for a paycheck. Paying an employee to stay home with a new baby or newly adopted child costs the employer money without getting any benefit in return.

The problem with this view of employment is how narrow it is. An employee's usefulness to a company is much greater than any particular 12-week span, particularly when you consider the cost of hiring a new employee to fill the gap. In California, where 12 weeks of paid family leave has been the law of the state for over a decade, researchers have found that mothers who took such leave were 6% more likely to be working a year later than those who did not.

The same researchers have also discovered that California women who took leave and returned to their jobs worked 15% to 20% more hours during the second year of their child's life than those who did not take leave.

Looking at the situation from a purely financial perspective, companies are going to be better off paying new parents for leave rather than spending money on hiring new employees, particularly considering the fact that employees who have taken advantage of paid parental leave will feel great loyalty toward their employers.

The facts from California bear this out. The President's Council of Economic Advisers reported in 2014 that more than 90% of employers affected by California's paid leave initiative saw either a positive or no noticeable effect on profitability, turnover, or morale due to implementation of paid family leave.

Paid Parental Leave Saves Money on Health Care

Mothers who have time to stay home with newborns have healthier babies than women who must return to work quickly. According to a study of European paid parental leave policies conducted by the University of North Carolina, more generous paid parental leave is found to reduce infant mortality and improve overall health in children. Considering the consistently rising costs of health care in the United States, the cost of paying for parental leave is going to be much cheaper for our government, society, and private sector than the cost of paying for a sick child's health care.

But it's not just the children who experience health benefits from paid parental leave. Mothers who have longer paid maternity leave report fewer symptoms of postpartum depression, which means they are better able to be fully engaged both at work and with their babies. And the mental health benefits do not stop with baby's first year. According to a study by the Network for Studies on Pensions, Aging, and Retirement in the UK, women who were able to use a more generous maternity leave policy were 14% less likely to suffer late life depression.

Fathers also experience mental health benefits by getting paid time off. Israeli researchers have found fathers who work as primary caregivers for their children will see changes in an area of the brain called the amygdala that help them to become better suited to parenting. In addition, a father's immersion in parenting duties has also been correlated with both enhanced child development and improved marital relationships — all of which can help the entire family's mental and physical health.

Paid Parental Leave vs. Public Assistance

Several states in addition to California have launched statewide paid parental leave initiatives. In New Jersey, a study from the Center for Women and Work at Rutgers University, discovered that mothers who had used the state's paid family leave policy were more likely to be working nine to 12 months after their baby was born than mothers who had not used the leave.

So what were the nonworking mothers doing? In many cases, families who do not have access to paid parental leave are forced to rely on other methods of getting by. In particular, the Rutgers study found that women who took paid parental leave in New Jersey were 39% less likely to be on public assistance and 40% less likely to receive food stamps in their child's first year compared to parents who did not take leave.

It can be difficult to tease out the differences between the taxpayer costs of state-mandated parental leave compared to the taxpayer costs of public assistance, but it seems much more financially beneficial for the family to use paid leave and ensure job continuity.

Paternity Leave Increases Maternal Paychecks

Much of the conversations about family leave centers around the mother-child bond, which is certainly understandable. Mom is the one whose body goes through the wringer during pregnancy and childbirth, and more time for her to physically recover and bond with baby is a good thing.

But when Dad takes time off to care for a newborn or newly adopted child, the entire family benefits financially. In Sweden, which mandates that fathers must take two months off for the birth of a new child (and that time can be taken anytime in Junior's first eight years), researchers found that the mother's annual income increased by nearly 7% for each month that the father took off from work.

The Children Are Our (Financial) Future

As much as parental leave helps parents, it's important to remember how much it benefits the kids. Mothers who used maternity leave will see their children attain higher education, have higher IQs, and earn higher incomes than mothers who didn't, according to research from The Institute for the Study of Labor in Bonn. These effects were biggest in families where the parents had less education and were less likely to have jobs that offered paid parental leave.

That means making a relatively small sacrifice now by instituting parental leave will lead to smarter, better educated, and more financially secure adults in 30 years or so. Those kids are the ones I want taking care of things once I'm back to drooling again — not the kids who were treated as a financial burden.

Widening Our Vision

The view that parental leave is too expensive is the societal version of spending a dollar to save a nickel. Parental leave benefits parents, children, and society far more than it costs. If everyone treated the cost of having children the same way many U.S. employers do — as a cost that is too great to bear — then the world would get dark and depressing PDQ.

Children are a social good, and we reap much more than we sow by paying the cost of parental leave.

Does your employer offer paid parental leave?

This article is from Emily Guy Birken of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

A Simple Guide to Rolling Over All of Your 401Ks and IRAs

Damian Davila — Wed, 18 May 2016 09:00:08 +0000

The median number of years that U.S. workers stick with their current employer is 4.6 years, according to U.S. Department of Labor. This means that sooner or later you're bound to quit, get fired, or get laid off from your current job. To avoid steep transaction fees, early distribution taxes, or losing retirement account contributions, you need to be ready to roll over your hard-earned nest egg when the time comes.

Establish How Much You Really Have

The first step is to determine the current balance of your 401K or IRA. While you'll eventually receive a separation from employment notice from your previous employer stating your total vested account balance, you can save time by researching your vested balance, net of any 401K loan balances you may owe.

Take Care of Any Outstanding Loans From Your 401K

Unlike IRAs, many 401K plans offer the option to take loans from your retirement account. As long as you keep up with your payment schedule, you generally have up to five years to pay back your loan in full. However, when you change jobs, the unpaid loan balance becomes due within 60 days.

Any unpaid loan monies by the deadline or transaction date of your rollover are subject to federal income tax, a 10% early distribution penalty for those age 59 1/2 and under, and state income tax or penalty, if applicable. You can't roll over unpaid 401K loans.

Know the Vesting Schedule

Your own contributions to your 401K or IRA are always fully vested. However, contributions from your employer to your retirement account may be subject to a vesting schedule. Trying to retain top talent as long as possible, employers may require a minimum period of employment before employees gain full control on part of their retirement accounts. The two most common vesting schedules are cliff vesting (100% vesting is only provided after a set number of years) and graded vesting (a vested percentage is provided every year).

When you separate from your employer, you forgo any non-vested contributions to your retirement account.

Once you know your outstanding loan balance and vesting schedule, you have a clear idea of how much you can rollover.

Choose Rollover Options

Under most scenarios, you have six options for your total vested account balance:

Keep your account;
Rollover account into a new or existing IRA;
Rollover account into a new or existing qualified plan;
Do an indirect rollover;
Request a full cash-out of your account; or
Do a mix of the above five options.

Let's analyze each one of these scenarios, because some of them may trigger taxes.

1. Keep Your Account

All retirement accounts stipulate a minimum amount required to remain in your old employer's plan, usually ranging from $1,000 to $5,000. If you're happy with your current financial provider, you can choose to keep the account.

Make sure to read the fine print because some providers may strip away some services (such as certain investment options or coverage of fees) and gain the right to convert your 401K into an IRA without your input. According to a Plan Sponsor Council of America survey of 613 plans with eight million participants, 57% of 401K plans transfer balances between $1,000 and $5,000 to an IRA when the participant leaves the employer.

While such forced-transfer IRAs don't trigger early withdrawal penalties or income taxes, they are often subject to high fees and low investment returns. A November 2014 report from the U.S. Government Accountability Office (GAO) found that forced-transfer IRAs have administrative fees, ranging from $0 to $100 or more to open the account, and $0 to $115 annually to retain the account.

2. Rollover Account Into a New or Existing IRA

Whether you have a 401K or IRA, your current provider will provide you the option to request a rollover to an existing IRA, or open a new one through any of their partner institutions. Either option triggers no income taxes or distribution penalties. Under this scenario, keep in mind that you're not bound to the offerings from your old employer's financial institution and have the option to shop around for a new IRA with other financial institutions, as well.

There are two types of IRAs: traditional IRA and Roth IRA. The main difference between them is that you pay taxes up front with the Roth IRA, and that you pay taxes at withdrawal with the traditional IRA. One of the advantages of owning an IRA is that there are many penalty-free ways to withdraw money from your retirement account before age 59 1/2. (See also: 7 Penalty-Free Ways to Withdraw Money From Your Retirement Account)

3. Rollover Account Into a New or Existing Qualified Plan

Besides an IRA, you can also rollover your retirement account into a 401K, 403(b), 457, Federal Thrift Savings Plan, or employer qualified plan, as long as the target plan allows those funds. Rollovers into new or existing qualified plans trigger no income taxes or early distribution fees.

The IRS provides a useful rollover chart to determine to which accounts you can rollover retirement contributions. However, the most surefire way to find out is by contacting your plan's customer service center.

4. Do an Indirect Rollover

Direct rollovers are only possible if you already have a retirement account with a previous or new employer or are able to open a new plan on your own. In the event that you think that you can find a new job offering a retirement account within 60 days, then you could try to do an indirect rollover.

Your old employer would cut you a check, withholding the necessary 20% for income tax purposes. Once you have a qualified plan with your new employer, you would deposit the check in full and add the 20% withholding out of pocket. The IRS will return you the 20% withholding when you file your tax return. Make sure to deposit the full amount because any gap is subject to applicable income taxes and penalties for those age 59 1/2 and under.

5. Request a Full Cash-Out of Your Account

This is the least desirable of all options because not only do you pay incomes taxes and trigger early distribution fees, but also forgo investment returns. At age 20, a $600 balance on a 401K may not seem like much. However, assuming an investment return of 6% compounded annually and a target retirement age of 65, you would be saying goodbye to an extra $8,258.77 for your nest egg.

Every year you have a ceiling on how you much contribute to your 401K or IRA. By cashing out that past contribution, you'll never be able to make it up.

6. Do a Mix of the Previous Options

Depending on your unique situation and set of rules from your old and new retirement accounts, you could use portions of your old account for different purposes. For example, you could cash out 10% of your vested account balance, subject to income taxes and early distribution penalties when age 59 1/2 and under, and rollover 90% of vested account balance to an IRA.

Doing a mix of rollover options requires careful planning and plenty of legwork, but it may provide the solution that is better suited to your financial goals.

The Bottom Line

Knowing how to rollover your 401K or IRA is a skill that you'll use many times throughout your work years. The process is relatively simple but requires many steps. Before rolling over funds, make sure to plan ahead by minimizing loans from your 401K and maximizing total vested balance. Contact your old and new plan managers so that you are aware of all applicable rules and can make an informed decision. Keep an eye on the deadline for a rollover so that you're not forced to take a cash-out or forced to transfer to a high-fee IRA.

Have you ever rolled over your 401K or IRA? How did you do it?

This article is from Damian Davila of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Here's How Your Credit Score Affects Your Job Search

Dan Rafter — Thu, 04 Feb 2016 14:00:03 +0000

If your FICO credit score is weak, you probably already know that this low score might keep you from qualifying for a mortgage loan, auto financing, or a new credit card. But can a low credit score keep you from landing your dream job?

The answer is a bit complicated.

Many people believe that employers check the three-digit credit scores of job applicants. But in reality, employers are forbidden from pulling your credit scores. (Yes, scores. You actually have three FICO credit scores, one from each of the three national credit bureaus — TransUnion, Experian, and Equifax.) What they can study is what is known as an employment screening report.

The Employment Credit Report

An employment screening is a version of the three credit reports that TransUnion, Experian, and Equifax maintain on you.

Experian's employment credit report, for instance, includes public record information such as bankruptcies, foreclosures, and liens. It also includes a credit history that shows any late payments that you might have made in the last seven years.

But one thing employment credit reports don't include is your three-digit FICO credit score.

You can thank the federal Fair Credit Reporting Act for this. This act limits how your credit information can be used. For example, thanks to the act, employers can't even run an employment screening — with limited exceptions — without you first providing written consent. If you refuse to provide this consent, prospective employers are forbidden to order any employment credit reports on you, though your refusal might make your potential new bosses think twice about hiring you.

If companies don't hire you because of information in your report, they must provide you with a copy of it. You can then review the report for possibly incorrect information. This gives you the chance to correct any mistakes that could cause potential employers to think less of your history with credit. (See also: What's a Split Credit Report - And How Much Is It Hurting Your Score)

When Employment Credit Reports Can Hurt

Not all employers check the credit of all potential hires. In most cases, employers will only check the credit of potential employees who will be working in a financial capacity or role.

For instance, if you are applying for a job as a chief financial officer, accountant, or bookkeeper, your employer might want to make sure that you’ve managed your own personal finances properly. The good news is you can take steps to improve your credit history, making your employment credit report more palatable to potential employers. The bad news is that improving your report takes time and discipline.

First, those negative marks on your employment credit report will take a long time to fall off. A Chapter 7 bankruptcy filing, for instance, will stay on your report for 10 years, as will a foreclosure. A late credit card payment will remain on your report for seven years.

But these financial missteps look less damaging as the years pass. Employers might not place as much weight on a bankruptcy filing that is eight years old, as long as your employment credit report doesn’t show any other financial mistakes after that filing.

So vow to pay all of your bills on time from now on. You can’t make those negative marks disappear prematurely. But you can make sure that your report remains clean from this day forward.

And while you're rebuilding your credit reports, take solace in the fact that the use of credit checks for employment is increasingly coming under fire. The Society for Human Resource Management in 2015 reported that 11 states limited employers' use of credit information in hiring decisions. The society also said that 17 additional states were considering legislation that would limit how employers can use credit information.

For instance, in Colorado, employers can't use credit information in hiring decisions unless the information is related to the job. In Delaware, most public employers can't check applicants' credit, while in Illinois employers are not allowed to rely on credit information when making hiring, firing, or compensation decisions, with limited exceptions.

Has your credit negatively impacted a job search?

This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: