Buried Treasure: Your Company’s HR Department
Yesterday while sorting laundry I dug into a pocket to find a SURPRISE $10 bill. How cool is that moment? I felt like I’d just won the lottery, even though the money was already mine. I’d just forgotten it existed.
I have a secret for you: if you’re gainfully employed with a medium/large company, you might be missing out on lots of those $10 bills. Forget the $10….let’s super-size that: You could be missing out on Benjamins, not Hamiltons.
Anyone reading NOT looking for free money?
The benefits you’re missing aren’t always monetary….at first. Just like you have to drink a fair amount of beer to create water, you might have to apply a little energy to claim your Benjamins. But with a little work, you too can turn workplace benefits toward your favor.
I was always amazed when I’d meet with a potential client and begin asking them what benefits they had through work. Outside of their 401k plan, some people were hard-pressed to find an answer. Some people had no idea what insurances were available, if they could invest in employee stock purchase plans, or discounts at local merchants.
You don’t want to be that person. It’s the holiday season. Let’s give ourselves a little present.
Five Workplace Benefits To Ask About Today
1) Workplace Education Programs
Does your company offer chances to learn more about how money works? These sessions are always free and often are provided by local experts. You might get a sales pitch at the conclusion of some of these sessions, but if you learn one or two points about your financial plan, why not jump on that opportunity?
“The mind is everything. What you think you become.” – Buddha
401k Flexibility
Give me a 401k plan from your company and I’ll giggle like a little girl looking for ways to make it work efficiently.
First, do you have a Roth 401k option, where money is deposited after tax and can later be removed tax free?
If you have crappy, limiting choices in your 401k, is there a self-directed option where you can invest in an expanded menu of options? Can you complete an in-service withdrawal to an IRA to manage funds? (Watch out before making this move…401k plans give you more flexibility to grab money before 59 1/2 than an IRA).
I’ve met many people who didn’t know that they could drastically alter their tax situation TODAY and IN RETIREMENT by investing differently. Don’t spend all day focusing on your investment options only to forget that you’ll also claim a huge return by having the right tax structure.
Local Discounts
My old employer offered a deal with the local health club, a membership retail chain, and several online retailers. I also received a discount with an insurance company inside of our parent company. Have you checked to see if any of these are available for you? Don’t know how to find them? Your HR team will know.
Employee Stock Purchase Plans
The worst financial advice I could give you is to load up on company stock. However, here’s a strategy we’d often employ: because many of my clients could purchase stocks at a 10 – 15% discount, I’d recommend they purchase some shares with each pay check. Then, as soon as they were able, sell the shares and diversify this money. If the stock found a way to stay even, the investor was able to claim a free 10% – 15% return. If the stock slipped, it would have to drop by 10 – 15% before they saw a loss.
The biggest downside to this plan was liquidity. Until the sale date, this money was wrapped up and untouchable in most plans. Don’t save your last dollar into a place where you can’t retrieve it quickly! Create your emergency fund first, and then use HR tools like an employee stock purchase program.
Also, don’t load up on the stock because you’ve decided to “hang on just a little longer.” Stick the the plan and diversify the stock so that you don’t regret a huge downturn in the future.
Legal Help
Have you been procrastinating on having that will drawn up? Well, procrastinate no more….and get it done more cheaply if you have a legal plan available through work. While these plans can drain you if you continually sign up and don’t use them, try this strategy: sign up for your legal plan for one year and use that benefit to have a will drawn up, along with a durable power of attorney and patient advocate designation (or health care proxy, as it’s called in some states). At the end of the year, remove yourself from the program. You’ll pay much less for your estate documents by using this company resource.
Are there any benefits you use through work that are often overlooked by others? Let’s help each other out by sharing more in the comment section below. Thanks!
I just recently found out that my job offers free psychological counseling for staff. No idea that it existed, but it could save a person hundreds a month!
What a cool benefit! I love Jim Gaffigan’s joke on Twitter today that he just doesn’t have the energy to have a nervous breakdown….
Great things to look out for Joe! I know I miss some of these now that we’re on our own. I’ve found that even small employers will have some sort of arrangement with some local retailers to get you discounts. Another run that I’ve found more and more are doing is wellness programs. I had an employer offer up to $500 in free money per employee per year for different things and many of them were fairly simple to do.
Great point, John! Wellness programs benefit everyone….you, the company (lower insurance claims) and the insurance company.
Hi Joe. I am participating in my company stock purchase plan for the first time: it has a 15% discount and a 6 month lookback (so the purchase price is that of the lower of the two dates at the end of either side of the purchase period, 6/30 or 12/31). I’m only dipping my toe in the water now, putting 1% of my after tax earnings into the plan. If I sell immediately, it’s a taxable event, and the 15% counts as a short term capital gain…but if I wait 18 months, then there are no tax consequences for that 15% discount (or at least that’s what they tell me).
Would you personally take more advantage of this benefit, and just sell right away?
That’s all true. You can go one of two ways: sell immediately (upside: less risk of volatility, less money invested in the stock) Or begin selling every six months AFTER the 18 month mark occurs (upside: tax savings, long term cap gains treatment). For me? I’d rather pay the additional tax and be safe….we were always in it for the free 15% minus the tax (which could make it a free 10% gain instead……). If the market drops severely, and you had sufficient reserves, I might rethink that, but that’s what I love about planning….we can change course midstream.
Since my employer has a fiduciary duty to the employees in running the 401K, they pay for a fee only financial planner to come in quarterly for meetings with whoever wants to sign up. I can chat with a planner free for an hour every 3 months!
Great info here, Joe! I’ll definitely be snooping on Rick’s work website later today to see what we’re missing. I’m especially interested to see if they have a Roth 401k option – I never even thought to look for that!
Good stuff Joe. I’ve never had much in the way of company benefits (one of the perks of a start up!) but I’m always amazed at what some of the larger companies offer. Even something as simple as a company 401k match has always felt to me like it would be reaching the holy grail.
I work at a Fortune 50 company and they offer most of the benefits you’ve highlighted here. Unfortunately, they are stripped down versions. The local discounts are pretty lame and often require you to spend extra money to get the discount. There’s a stock purchase plan for just 5% off and the holding restrictions and general volatility of the stock don’t make it that enticing unless you have a surplus of money to play with. The 401k fund options all have higher expense ratios than I could find elsewhere and there’s no self-directed option. In fact, the HR department actually COST me money the year before last. They botched the paycheck deductions for my dependent care account (didn’t withdraw enough so my tax break was less) and then “could not” fix it because the calendar was over and the “IRS wouldn’t let them.”
Anyway, this is a good idea to get up-to-speed on company benefits for which you might not be taking advantage. Sorry for my rant, I guess I’m a bit jaded at the moment!
I work in government so yes I do have amazing benefits and I take advantage of most of them. I can’t believe I didn’t in my younger days…what a waste. I have a 457 plan and the options are great…many low cost options. There is also a Roth 457 option…but I haven’t determined whether a roth or traditional one is better.