How to quit your job wisely, part 1: Quitting without losing too much money

Quitting "before your next vesting accrual date [is] a lot of money to leave on the table."  


As the U.S. economy rebounds from the coronavirus pandemic, a record number of people are quitting their jobs. Nearly 4 million people quit in April, according to the Labor Department, and another 3.6 million people left their jobs in May. 

Experts say this high "quit rate" is a sign people are confident they can find better work opportunities elsewhere. That's not an unusual aim for job switchers: In fact, 35% of workers say their top reason for leaving their current job would be for better pay and benefits, according to a 2021 Achievers Workforce Institute survey of 2,000 employed individuals.

But quitting your job can cost you money in the form of lost benefits. Here are three dangers to keep in mind, and what you can do to minimize the damage.

Unvested 401(k) contributions

If you have a workplace retirement plan, you may not be able to take all of the money with you when you leave. Contributions your employer makes, such as matching contributions or profit sharing, may not vest immediately.

Vesting refers to how long it takes until you "own" your employer's contributions. Almost half, 47%, of participants are in plans that vest matches immediately, and the rest are in ones that do so over set schedules that span up to six years of service with the company, according to a recent report by Vanguard

Timing your exit could make a big difference in how much you walk away with. "You want to pay attention to the vesting schedule," says Carolyn McClanahan, a certified financial planner and the director of financial planning at Life Planning Partners in Jacksonville, Florida. In many cases, "you'll vest 20% every year and then after five years you're 100% vested. So if you leave a day before your next vesting accrual date, then that's a lot of money to leave on the table."  

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Lingering FSA balances

A flexible spending account, or FSA, is an employer-sponsored account in which you can stash pre-tax dollars for particular expenses. There are three main kinds: for medical expenses, for commuting costs, and for dependent care.

Spend those balances down before you give notice. If you have an FSA through your employer, typically, "when an employee quits, they lose that money," says John Dooney, HR knowledge advisor at the Society for Human Resource Management. "They're not able to recover that." Depending on the company and FSA plan, you might have a short window after you quit to submit claims or make new transactions.

How much could be at stake: For 2021, the maximum you could put in a medical FSA is $2,750 per year, and a dependent care FSA, $10,500. The monthly limit on transit expenses is $270 ― and many people have unused balances lingering from last year when we suddenly went remote.

One bit of good news about an FSA is that you often pay into it with each paycheck, so if you do decide to leave before spending all of your balance, you might not be losing much money.

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Unused paid time off

Americans have historically been bad at taking their vacation days. More than half, 55%, of workers reported that they didn't use all of their vacation days in 2018, according to the U.S. Travel Association. And that was before the pandemic hampered people's plans to use that PTO, leaving many workers with days they rolled over into 2021.

Before you leave, check how many vacation and sick days and other paid time off days you have left. Then look into your company's policies about what happens to those if you quit. About half of U.S. states have laws that require employers to pay out an employee's unused vacation days at the end of their employment, according to NOLO. Even in states that don't, some companies have more generous policies.

If your company doesn't pay those out, by not taking that paid time off, you "could leave PTO days on the table," says Dooney. In other words, before you give notice, make sure you get that last vacation in.

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