Cooler temperatures and colorful leaves are the most obvious signs that we’re about to transition seasons. The new season also means the arrival of the annual open enrollment email in your inbox. It’s easy to make this decision on auto-pilot, choosing to keep things the same for another year. However, we encourage you to do a deeper analysis of what benefits you need for 2020.
Here are some common employer benefits offered and things to consider:
- This benefit has seen a lot of change in the past several years as the popularity of high deductible plans has grown. But just because a high deductible plan met your needs this year, doesn’t mean the same applies for next year. Consider any upcoming medical needs (ex. surgeries, births, etc.) when deciding on a plan to make sure you are managing costs strategically.
Retirement plan contributions
- Perhaps one of the best benefits offered during open enrollment! Even if your company doesn’t have a matching program, the ability to defer income into a retirement plan reduces taxable income now and allows for years of tax-deferred growth. If you are eligible for matching contributions, make sure you are contributing at least enough to get the full match. Most retirement plan custodians have the option to set up automatic annual increases (ex. increase by 1% each year), which is a great way to add more without even having to think about it.
- Hopefully a benefit that you never need, but without a doubt one that you should have. Most employers offer employees a small amount of group term life insurance. In addition, certain employees can purchase more coverage for themselves, a spouse and children. Adding more coverage is often very cheap, but the policies are only in effect while you are employed. If you leave that employer, continuing coverage is expensive and/or only offered for a short time. Instead, it may be worth exploring personal life insurance policies, as those policies are not tied to employment.
Dependent care, FSA/HSA and commuter benefits
- These are some other common components of a benefit package that you have to renew each year. Consider setting aside funds for childcare costs, medical expenses and parking. Make sure you are aware which benefits need to be fully used up in 2020 or which ones allow for a balance to be carried forward. The tax savings could easily be negated if you don’t use up the full amount you deferred and lose it.
Company stock elections
- Many companies allow employees to participate in stock purchase plans, which allows you to buy shares at a discounted price. You may also be eligible for stock options, restricted stock units or other equity-related compensation. A big consideration in this case is the lack of diversification when dependent on the stock of one company. If you are diligent about selling such shares and awards once received and reinvesting the proceeds in a diversified portfolio, then you could see a lot of financial benefit.
As a client of White Oaks, you don’t have to make these decisions alone. We help our clients think through these choices on an annual basis as part of our comprehensive wealth management services. If you think that a second opinion in this next round of open enrollment is what you need, then contact White Oaks today!