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Financial Checklist for Relocating Employees

Nathan Garcia, CFP - May 02 2016
Published in: Ask the Experts

Whether the mobile talent you serve is moving for the first or fifth time, the transition can require significant adjustment personally, socially, and financially.

Here, we’ll explore some of the most commonly overlooked areas of personal finances that will be impacted by your employee’s move.


If you’re moving transferees to high-tax states like California or New York, they should be aware that their taxes at the state level could increase. This is valuable information for them to know before their transition, so they understand how their paycheck could be affected by the move. Reviewing the taxes your employee will owe in their new location will allow them to make appropriate selections on their withholdings. Are you ever shocked when you go to prepare your taxes, only to discover how much you owe or what you’ll receive?

If after making a comparison between current and new locations, your employee discovers that their taxes will indeed be higher, there are two key options to reduce the sting: contributions to their 401(k) plan or to a health savings account (HSA). Each of these can allow pre-tax contributions, which discounts their total taxable income at the end of the year. 

The advantage is that your employee will typically have lower monthly premiums and can put pre-tax contributions into a tax-deferred account.


Moving to a new location could present new insurance needs. Your employee’s health, dental, vision, life, and disability insurance may remain the same if they continue with the same company. Beyond this coverage, personal property and casualty insurance (home and auto) will require updating upon moving to a new state. 

Adjusting auto insurance coverage amounts could require your employee to increase their budget or could result in extra savings. However, it’s helpful to know what minimum coverage amounts are required by each state and their cost for planning purposes. Also noteworthy, if your mobile talent will be purchasing a home in a new state, is whether they will need flood insurance. 

Your employee’s auto insurance minimum requirements are the legal amounts necessary to pay for medical, liability, and property damages if an accident were to occur. It’s important to remember that these are just minimums. Consider recommending increasing their coverage beyond these amounts, particularly if they live in the city. 

If your employee will be purchasing a new home, make sure they understand whether the property is in a flood zone and that they’re aware of the cost of this coverage. The monthly premium should be factored into their overall cost of living when building their new budget. Finally, check with a mortgage lender to ensure your mobile talent understands their requirements concerning flood insurance.


With a clear understanding of your employee’s tax obligations and the cost to protect their downside risk, we can focus on growing their wealth through investments. The bulk of most people’s investing capital lies in their retirement accounts, primarily their 401(k) and IRA. 

Transitioning to a new location shouldn’t require too great an adjustment to an individual’s investment risk tolerance or savings amount, unless they’ll experience a 10 percent difference in take-home pay following the move. Contributions to a 529 college savings plan or the ability to roll over old 401(k) plans into an IRA or new 401(k) plan could require adjustment, however. 

If the transferee was previously contributing to an in-state 529 college savings plan, the associated tax benefits may be lost after the move. They’ll want to review the college savings options in the new state and any tax benefits they may offer. Many states will provide a deduction on state income taxes for contributions made to the in-state plan. These savings are often very small and can be phased out; however, any opportunity for tax savings is worth consideration. 

Beyond simplifying your employee’s management of accounts, consolidating accounts may reduce their investment fees. Separate IRA or 529 plans could charge separate account fees. Your mobile talent may also have different share classes in each account, which means they may be paying wholesale rates for mutual funds in one account and retail rates in another. Consider advising your employee to evaluate the total investment fees between their IRA and 401(k) plans before rolling funds from one into the other. Some 401(k) plans offer institutional shares that could have very low investment costs. These same prices may not be available in an IRA below a certain account size or may depend on your employee’s account agreement. 

If your employee discovers their 401(k) investment options are expensive, they could consider a self-directed IRA within a 401(k) plan. This option will allow greater flexibility of investment options, but beware that the same level of due diligence and oversight does not exist with this account.

Legacy Planning

While I am not licensed to practice tax accounting or law, I can point out areas in which I have assisted clients in the past when moving: updating beneficiaries and legacy planning documents. Reviewing your mobile talent’s beneficiary forms is particularly important if they have had a major life change in the past year, such as divorce, birth of a child, or death of a spouse. They’ll want to review their beneficiary designations on their life insurance and 401(k) plan. There have been instances in the past where a decedent’s life insurance proceeds or retirement savings have transferred to an ex-spouse because the beneficiary forms were not current. 

Beyond just making sure their beneficiary designations are current, it’s also prudent to ensure that transferees have a primary and contingent beneficiary in any instance a beneficiary is allowed. This provides a backup if their first choice is no longer living at the time the assets transfer. Most forms provide space for each, but even if not, they can write the contingent beneficiary’s information in the margins. Your mobile talent’s beneficiary designation supersedes their will or any other transfer instructions, so it’s important to take a minute to update this information.

Finally, after moving to a new state, your employees should consider updating their legacy planning documents, including their will, power of attorney, and medical directive. These documents offer a tremendous benefit to their family to ensure that their estate is settled in an orderly fashion. I’ve also seen the medical directive allow family members to focus on the individual getting better rather than on medical decisions. Updating these documents will also allow them to determine whether there are resources to store them with the state in the event that your medical power of attorney can’t be reached after an accident. 

Hopefully by now you’ve picked up on a few areas where you may be able to enhance your employee’s financial standing. At a minimum, the above-mentioned items can serve as a basis for making sure your transferring employees have their financial house in order.