After four years with a Big 5 IT consulting company, I am leaving for a small IT company.
In many ways, I am getting back to my roots working in a fast growing IT firm doing the things I love most, Network Operations and Network Management.
I will be starting my new gig this coming week.
I originally hoped to write a post about negotiating a new salary but as things turned out, there was not all that much negotiation done.
Basically I got most everything I asked for.
- I got a career opportunity with a company and a CEO I am very happy to work for.
- I got a salary increase I am happy with.
- I got a benefit package . . . well to be quite frank, is just OK.
That is where what little negotiation there was really happened.
- The health plan for me and my family doesn’t change but the cost is a bit more.
- I get less life insurance, so I have to purchase my own plan.
- There is no commuter reimbursement program either, so my commuting expense will increase.
Since I would need to spend a bit more money to “purchase” benefits and coverage I was losing, I countered by asking for a signing bonus to help make up for this difference. Normally I would ask for more salary but I already priced my salary request on the high end of my range simply because I was expecting to receive a lower offer and then “negotiate” back up. But as I said, they gave me what I was asking for so I asked if there was a signing bonus plan available.
Recruiters and HR departments sometimes keep this out of the initial offer.
I was told by the CEO they do not offer signing bonuses. Reason being that it is basically giving money for work that hasn’t been done yet. So he countered by including me in the management incentive plan which basically states that if the customer is happy, the company gets a bonus which gets divvied up on a quarterly basis. If we exceed our contract goals, this would make up for any added expense I am incurring.
Did I mention I really like the way this CEO thinks. Countering with a pay for performance management bonus instead of handing out a bonus for not really doing anything. He seems to be tough and fair with a good dose of practicality.
So that left me with the decision of what to do with my 401K.
I am an active investor with my regular investment fund (non-retirement money), but when it comes to my 401, I am as hands off as one can get. I try to diversify and then basically look at it once a year to see if I need to do any rebalancing.
The new company 401k does not become eligible for 90 days and quite frankly is much like their other benefits. Not great but OK.
I took a snap shot to illustrate and show where I am now.
Overall, I cannot complain with my current 401k allocation. Though from what I have read, most financial advisors might say my allocation does not match my age (55). Maybe when I retire I will look to be more conservative but until then this has pretty much been my retirement investment strategy for the past 20 plus years and over all it has served me pretty well.
So what are the advantages and disadvantages of keeping my money where it is vs rolling it over?
- The advantages are that performance has been really pretty good and I don’t think I am getting killed with fees. For the moment, I have good access to the money. 401K accounts are better protected from law suits than IRA accounts. (not that anybody ever plans on getting sued, but you never know) You can, in moments of desperation, take a loan out against a 401K. And 401k’s have the option of taking money out without penalty at 55 instead of 59 and 1/2 which is the age set for IRA.
- The disadvantages are that if the management company or funds changes I may not have the easy access I currently experience and may not like the allocations available to me. I cannot continue contributing to my former employers plan. And, though the investment selections are good, there are not as many as I would have with an IRA.
My other concern is that I do not want to start spreading around my retirement monies into several 401k’s.
I like keeping things as simple as possible. So my choices seem to be:
- Wait 90 days and roll over the money to my new employers plan even though it is not as good as my current one.
- Keep what I currently have where it is.
- Roll it over to an IRA (I would probably choose TD Ameritrade simply because that is where I do most of my investing now) I know there are other players out there like Betterment and Wealthfront but that would mean being less simple and having multiple brokers.
What do you think?
Which option would you choose?