Most people accept a new job offer thinking about salary and title. What they don't think about: the potential financial gaps that could trip you up in the process of changing jobs or making a career pivot (even if you accepted a job with more starting salary).

Eric and Kali break down everything that is likely to shift with your finances when you change jobs. They cover what often goes wrong that most people never consider, including:

The tricky tax trap if you put your new 401(k) on autopilot and don't calculate what you're actually allowed to contribute for the year - because whatever you put into your old 401(k) before you switched jobs counts toward the max!
Why you may have to pay back HSA contributions you already made if you change jobs
What to watch out for in ambiguous offer letters that make promises of equity compensation… but don't actually include real guarantees.
How group life insurance through your employer can actually be more expensive than a private term policy once you need significant coverage, not less

In this episode, we're explaining how you can be better prepared to fill all the financial gaps that a career pivot can leave (yes, even when you're changing jobs for a better-paying position). Instead of just focusing on top-line numbers like base salary, we're coaching you on how to deal with:

Health insurance gaps, COBRA, and how a job change is a qualifying life event you can use strategically
The four things you can do with an old 401(k), and why the "right" answer is genuinely different for every person (including some of the decision tree we use to guide our financial planning clients)
Why rolling your old 401(k) into an IRA can blow up your backdoor Roth IRA strategy
How to read a job offer letter like a financial planner: total comp, bonus probability, equity type, and what's actually negotiable
What your real financial runway looks like if there's a gap between jobs, and how to calculate it

KEY TAKEAWAYS

Changing jobs can create financial planning gaps - but you can cover them if you know where to look.

When you change jobs, you need to consider how your health insurance will change, if you have sufficient life and disability insurance, what kind of runway you have if you're looking to take a break between jobs (or if you experienced a layoff), and what to do with things like old 401(k) plans or HSAs.

A job change is a qualifying life event for health insurance changes.

If you change jobs, or lose your current job, you have 30 days to elect new coverage. While many people think of COBRA when laid off, don't forget to consider switching to a spouse or partner's plan. When changing jobs, always compare the new employer's benefits to your spouse's so you can choose which option is best for your household.

Look at the full value of the compensation package if offered a new job.

Salary is just the starting point. Bonus probability, benefits costs, and equity type all affect your real take-home pay. Read the benefits guide before you accept the offer, not after. Most people don't ask for it upfront, but it's fair game to request. Knowing what you're gaining and losing on insurance, retirement matching, and other perks before you sign gives you information, and possibly leverage in negotiations.

Group life insurance isn't always the deal people assume it is.

Once you add supplemental coverage to get to a meaningful benefit level, group premiums can actually cost more than a private level-term policy. Plus, group policies often don't travel with you, can be more expensive than private coverage at higher benefit levels, and may lack important riders like cost-of-living adjustments. Take the free base coverage from an employer when offered, but then consider getting private term life and private long-term disability insurance so you're protected regardless of who employs you or what their benefits package looks like.

Be very careful with new 401(k) plans when setting up withholding amounts when you change jobs midyear.

Your new employer's 401(k) has no idea what you already contributed this year. The IRS limit is per person, not per plan… and you're the only one tracking that when you switch jobs. Blow past the limit mid-year job change and you're looking at a paperwork headache to reverse it.

Know the rules around HSAs, too

Your HSA is more flexible than your 401(k), but mid-year plan changes can create tricky contribution rules. If you switch to or from a high-deductible plan, know the rules before you max out.

Don't just leave your old 401(k) behind

You have four options for an old 401(k): leave it, cash it out (usually a bad idea), roll it into your new employer's plan, or roll it into an IRA. The right answer depends on investment options, costs, and whether you use a backdoor Roth IRA strategy.

Cash reserves are your runway.

A 6+ month emergency fund gives you the breathing room to make a career transition on your own terms — or weather an unexpected layoff without tapping your retirement accounts.

FINANCIAL PLANNING FOR A JOB CHANGE FAQs

Q: I'm changing jobs and my new employer also offers a high-deductible health plan with an HSA. Can I just keep maxing out my HSA like normal?

A: Maybe; the timing really matters. If you were on a high-deductible plan, maxed your HSA, and then switched to a non-high-deductible plan mid-year, you might actually have to pull some of those contributions back. On the flip side, if you gained a high-deductible plan mid-year, you could still max out the full year.

Q: My new offer looks like it pays more. How do I know if it actually does?

A: Remember that salary is just one line item in your total comp. Think of it like a business… everyone talks about revenue, but what actually matters is your profit. To figure that out, you have to consider expenses too. When applied to a job, that means you need to look at the value of the total benefits package, and what accessing certain policies might cost you (especially relative to what you currently pay). Health insurance premiums might be higher at the new company. The bonus might be bigger on paper but have a much lower chance of actually paying out. And if you have unvested equity at your current job, you're walking away from real money. Run the full math on take-home pay before you assume the new offer is actually better.

Q: Is my offer letter a guarantee of equity compensation?

A: Equity comp is certainly part of your total compensation package and should be factored into a calculation on the total value of your overall pay. But that assumes you are actually being offered literal equity versus something like a shot at future shares. Always ask for the actual grant agreement and equity incentive plan documents before you sign anything. If it's written as a recommendation rather than a guarantee, treat it as zero until it's locked in writing.

Q: I already maxed out my 401(k) at my old job this year. Can I still contribute to my new employer's plan?

A: Nothing says you can't contribute to multiple 401(k) plans in a year. But the IRS contribution limit is per person, not per plan. This one catches a lot of people off guard. Your new employer's 401(k) has no idea what you contributed at your last job. If you change jobs midyear, opt into the new job's plan, and don't calculate how much you can actually contribute without going over the limit from your old plan AND the new one, you could blow past what the IRS allows. This is a massive headache to undo later; you'll have to file paperwork to reverse the excess, calculate gains on that money, and remove those too.

Q: Should I roll my old 401(k) into an IRA or my new employer's plan?

A: It depends — and anyone who gives you a blanket answer either way is oversimplifying. Leaving a plan with an old employer is almost always the wrong answer, as is cashing out the 401(k). So that leaves you with two reasonable choices: roll the old 401(k) into your new employer's plan, or roll it into an IRA. The big factors to look at when deciding: How good are the investment options in the new plan? What are the fees? Do you use a backdoor Roth IRA strategy? If you do, rolling old 401(k) money into a traditional IRA can prevent you from executing on that in the future. That's a big argument for rolling funds to a new 401(k) versus an IRA. But if the new 401(k0 plan has limited choices or high costs, it might still make sense to use an IRA. Among our clients, we see a pretty even split of people who are better served rolling an old 401(k) into an IRA and those who should roll an old plan into a new 401(k).

Q: Is group life insurance through my employer actually a good deal?

A: Not always. Once you start layering in supplemental coverage to get to the benefit level you actually need (our rule of thumb is about 10x salary), group premiums can actually be more expensive than a private level-term policy. Group rates also tend to go up as you age. A private term policy locks in your rate for the full term. Our typical approach: take the free base coverage your employer offers, then fill the gap with a private policy.

Q: What happens to my disability insurance when I change jobs?

A: It depends on the plan. Some group disability policies are portable, meaning you can take the coverag...