Author Topic: Best Day to Quit  (Read 9743 times)

Franklin

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Best Day to Quit
« on: October 15, 2014, 01:40:30 PM »
I'm putting together a master list of variables that would help determine the best day of the year for someone to quit their job.  Here is what I have so far:

1. Medical Benefits - Your medical benefits will be active until the end of the month.  So the earlier in the month you quit the better.

2. FSA - Your FSA is fully funded by your company on January 1. But you pay them back through payroll deductions over the course of the year.  So the earlier in the year you quit the better.  Reimbursements are still honored even after you leave the company.  If you have a moral objection, ask yourself who benefits every year from the "use it or lose it" policy.

3. Bonus - This date varies depending on the company you work for, and it looks suspicious when you ask for the date.  Sometimes you qualify on the day the check clears.

4. Vesting - Some employees receive company stock with a vesting schedule.  You'll want to check the annual vesting date.

5. IRA - You'll want to show at least enough taxable income to equal the amount you want to contribute to your IRA for that year.  So if you want to contribute $5500, make sure you have earned atleast $5500.

6. Commission - Another one that varies by company.  Make sure you've qualified.

7. Tips - Wait until the end of the day, when tips are split up.

8. Read - http://forum.mrmoneymustache.com/welcome-to-the-forum/epic-fu-money-stories/     ...and then MAKE IT HAPPEN.


What have I missed?
« Last Edit: October 15, 2014, 01:57:35 PM by Franklin »

Gone Fishing

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Re: Best Day to Quit
« Reply #1 on: October 15, 2014, 02:19:50 PM »
401(k)-If you want to max it out for the year you will probably need to set a pretty aggressive contribution rate in the beginning of the year.  It won't help you get any more match but it will help with your taxes.

Vacation-Check your policy to see how your vacation is paid when you quit.  As I plan on taking the 2nd half of the year off, I don't plan on using much up to that point.  I'd rather get a larger last paycheck.
« Last Edit: October 15, 2014, 02:39:53 PM by So Close »

Gone Fishing

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Re: Best Day to Quit
« Reply #2 on: October 15, 2014, 02:27:39 PM »
Our benefits are purposely strung throughout the year for example:

Bonus is paid around April 1st, but considered "earned" on 12/31.  I'm not going to trust them to pay me my bonus while I am not employed, lest they back out on some technicality.

Pension service years are credited after a 1000 hours or sometime in June.

Stock options vest in the fall.  I never qualified for them (they kept raising the bar), but I am kind of glad as these are on a 5 year rolling vesting schedule and unless you retire at 55 or later you will always leave 5 years worth on the table. 

trailrated

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Re: Best Day to Quit
« Reply #3 on: October 15, 2014, 02:32:40 PM »
As the OP to the FU money thread I am honored to have the thread mentioned haha. For reals though, this was an awesome post.

furrychickens

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Re: Best Day to Quit
« Reply #4 on: October 15, 2014, 02:57:30 PM »
Cool thread. I'll be quitting my job (not retired, but our Mustachianism has made my small income optional) to get more family time next year. I'm hoping by the time summer comes we will have enough.

I get paid quarterly bonuses, which just got increased to $500 from $300 despite my annual income being only a bit under $15K. So for me, my logical 2 weeks notice giving dates would either be the second week of April or the second week of July.

Eric

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Re: Best Day to Quit
« Reply #5 on: October 15, 2014, 03:06:27 PM »
Nice list Franklin!  I didn't even consider the IRA income issue.

Along with the medical benefits, make sure that you schedule some dental appointments and probably a full physical while still on the employer's subsidized plan.

Hotstreak

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Re: Best Day to Quit
« Reply #6 on: October 15, 2014, 03:32:51 PM »
Franklin, great list.  Here's a few more that might be worth looking at:
The season and your interests (avid outdoors people quit before summer, skier quits in late fall).
 
The busy time of year at work.  Working all the 40 hour weeks and leaving before the 60 hour ones kick in.
 
When your spouse quits.  If they get a huge commission, you might quit after they receive it, regardless of you not optimizing yours.
 
When your kids are out of school for the summer or winter holiday (or when they're NOT, depending on which you prefer).
 
When any fringe benefits kick in (prepaid subscription, gifts/entitlements for 15yr anniversary, etc.).
 
As Eric just mentioned, medical insurance is more than just that "month".  If you get 90 day prescriptions, or have regular appointments, time with those (your new insurance might cause delays).  If you have a large deductible, consider leaving at the beginning of your plan year, so you don't end up paying towards 2 separate deductibles.

Pave

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Re: Best Day to Quit
« Reply #7 on: October 15, 2014, 05:13:34 PM »
Additionally to 5. IRA: Quit just before you hit 25% tax bracket. Easy money in low brackets, plus get your capital gains and dividends tax free for the year.

« Last Edit: October 15, 2014, 05:15:32 PM by Pave »

JoJo

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Re: Best Day to Quit
« Reply #8 on: October 16, 2014, 12:50:53 PM »
My company always has some turnover around April 1 each year as the 10-30% bonuses are paid the last Friday of March.

Our company has a perk that it puts $500 in your HSA in the first paycheck of the year if you have the HD plan & you are scheduled to put money in it over the year.


sol

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Re: Best Day to Quit
« Reply #9 on: October 16, 2014, 11:44:50 PM »
I have a small book written on this topic from the perspective federal employees.  I'll summarize some of the major points:

In our case our annual leave is paid out as a lump sum upon separation and our sick leave is unpaid but counts towards our creditable service total.  I intend to use up every hour of both types of leave before I quit, so that they both count towards my years of service AND are paid hours.  And if you get a lump sum payment, it counts as earned income and so cuts into the total you can roll over into a Roth IRA pipeline that year.  Better to get rid of it.

Federal pensions are based on your pay in the year you retire, so if there is going to be a federal raise kicking in January 1 (hasn't happened in a while) then we're better off retiring Jan 1 than Dec 31.   

Everyone recommends retiring at the end of a pay period instead of the beginning.  Things like leave accrual and TSP payments are step functions, so best to quit right after they happen instead of right before.

There are three paid federal holidays in Dec/Jan.  Much better to quit after them and get paid for three days of not working.

Then there are lots of details related to pension eligibilty dates that I won't bore you with.


Janie

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Re: Best Day to Quit
« Reply #10 on: October 18, 2014, 06:33:32 AM »

Federal pensions are based on your pay in the year you retire, so if there is going to be a federal raise kicking in January 1 (hasn't happened in a while) then we're better off retiring Jan 1 than Dec 31.   


FERS is based on average basic pay earned during any 3 consecutive years of government service.

ETA link on computing FERS annuity and high-3 salary http://www.opm.gov/retirement-services/fers-information/computation/
« Last Edit: October 19, 2014, 07:00:14 AM by Janie »

jawnzee

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Re: Best Day to Quit
« Reply #11 on: October 18, 2014, 08:47:10 AM »
I'm starting to plan this as well.  I'm planning on hiking 5000 miles next year starting in May.  I get a bonus of a few hundred dollars in March for my hire-on anniversary.  Get a few holiday days off in December and the work load is so light anyway that it's a breeze.  But I also feel so strapped for time while there are several (non-work) projects I really want to get completed before I leave, so quitting as early as possible so that I can dedicate myself to those would be preferable...

MrsPete

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Re: Best Day to Quit
« Reply #12 on: October 18, 2014, 06:35:29 PM »
Good general thoughts, but I think most of us have specifics that apply to our own jobs.  For example, as a teacher:

- I'm required to retire on the first day of a month OR at a 9-weeks break.
- I'll be eligible for my pension November 1st (not this year), but if I stay through December, I'll be paid for Christmas break. 
- If I stay 'til -- is it February or March? -- I'll get a longevity check.  If I leave before that point, I'm not sure whether I'd get a pro-rated check or not. 
- But I am definitely leaving before the end of the year.  February and March are just endless months that stretch on and on, and May is a horrible month for teachers, especially teachers of seniors.
- I have no intention of substitute teaching, but a just-retired teacher cannot sub for six months after his or her retirement.  This could affect people's plans. 

rayt168

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Re: Best Day to Quit
« Reply #13 on: October 20, 2014, 09:07:33 AM »
If you are in a high deductible plan and your employer makes a contribution to your HSA, wait for the contribution assuming the amount justifies staying that long.

BPA

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Re: Best Day to Quit
« Reply #14 on: November 20, 2014, 05:03:25 PM »
Good general thoughts, but I think most of us have specifics that apply to our own jobs.  For example, as a teacher:

- I'm required to retire on the first day of a month OR at a 9-weeks break.
- I'll be eligible for my pension November 1st (not this year), but if I stay through December, I'll be paid for Christmas break. 
- If I stay 'til -- is it February or March? -- I'll get a longevity check.  If I leave before that point, I'm not sure whether I'd get a pro-rated check or not. 
- But I am definitely leaving before the end of the year.  February and March are just endless months that stretch on and on, and May is a horrible month for teachers, especially teachers of seniors.
- I have no intention of substitute teaching, but a just-retired teacher cannot sub for six months after his or her retirement.  This could affect people's plans.

Interesting.  I teach in Ontario and my considerations are:
1.  Max out benefits.
2.  Retire at the end of December because then I won't have to pay Ontario College of Teachers dues and if I take the commuted value of my pension, my tax hit will be less if I get it early in the new year.
3.  I do not want to supply teach.  I've spent my entire career raging at teachers who quit and then take jobs from newer teachers.  There are way too many teachers and not enough jobs where I am.

Dr. Doom

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Re: Best Day to Quit
« Reply #15 on: November 20, 2014, 05:48:56 PM »
401(k)-If you want to max it out for the year you will probably need to set a pretty aggressive contribution rate in the beginning of the year.

+1, this probably applies to many people.  I'm leaving next year and my contribution's been set to the highest my company allows (70%) for Jan-April next year for this purpose -- HR was happy to do this for me (albeit a bit puzzled.) It's generally good to front-load anyways (link to Mad Fientist article.)

Not sure if this is off topic or not, but I've also decided to give 6 weeks notice instead of 2.  I have a good relationship with my employer so I doubt they'd say no to me working the full 6 weeks, and I suspect the time will be easier since they will know I'm on the way out.  So, probably good for both of us.  We'll see.

Some people combine RE with a home-sale and the spring/summer season is generally the best time to jump properties, lots of people looking and moving around.

Neat thread, thanks for posting it.

MikeBear

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Re: Best Day to Quit
« Reply #16 on: November 20, 2014, 09:14:23 PM »
Any day that ends in "Y".  ;^p


markbike528CBX

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Re: Best Day to Quit
« Reply #17 on: July 29, 2017, 08:52:02 AM »
posting to follow, link.

Since this is my last summer of work, all the 401k front loading ideas are cool.

Davids

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Re: Best Day to Quit
« Reply #18 on: July 30, 2017, 06:35:52 PM »
For my employer it would be April since bonus is paid in March.

markbike528CBX

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Re: Best Day to Quit
« Reply #19 on: July 30, 2017, 07:26:25 PM »
Is there any correlation with company fiscal year?

Even though my goal is "not another summer", and my company fiscal year starts on April 1, (irony noted), and I'd like to mentor my colleagues, I'm still unsure about pulling the plug.

Monkey Uncle

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Re: Best Day to Quit
« Reply #20 on: July 31, 2017, 04:45:52 AM »
I have a small book written on this topic from the perspective federal employees.  I'll summarize some of the major points:

In our case our annual leave is paid out as a lump sum upon separation and our sick leave is unpaid but counts towards our creditable service total.  I intend to use up every hour of both types of leave before I quit, so that they both count towards my years of service AND are paid hours.  And if you get a lump sum payment, it counts as earned income and so cuts into the total you can roll over into a Roth IRA pipeline that year.  Better to get rid of it.

Federal pensions are based on your pay in the year you retire, so if there is going to be a federal raise kicking in January 1 (hasn't happened in a while) then we're better off retiring Jan 1 than Dec 31.   

Everyone recommends retiring at the end of a pay period instead of the beginning.  Things like leave accrual and TSP payments are step functions, so best to quit right after they happen instead of right before.

There are three paid federal holidays in Dec/Jan.  Much better to quit after them and get paid for three days of not working.

Then there are lots of details related to pension eligibilty dates that I won't bore you with.

Good list, Sol.  Couple of quibbles, though:

-- If you leave before reaching minimum retirement age and 20 yrs of service (i.e., resign instead of retiring), your unused sick leave does not count as creditable service.

-- If you use up your annual leave, you do indeed get paid for it and get it credited toward years of service.  But you only come out ahead if you move your FIRE date out by a period of time equal to the annual leave that you use.  So if you set a specific FIRE date and then use your annual leave instead of hoarding it, you get the same amount of service credited, but you forgo the lump sum payout.

LalsConstant

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Re: Best Day to Quit
« Reply #21 on: July 31, 2017, 05:44:07 AM »
If you do not leave under adversarial conditions or your employer isn't incompetent, HR departments can be a good source of counseling for the best day to resign.  This will vary by workplace; if your employer screws people obviously this is no good.

SC93

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Re: Best Day to Quit
« Reply #22 on: July 31, 2017, 11:38:10 AM »
Back when I worked for others, as the alarm would sound and I was laying in bed struggling to get up, I knew what day was the best day to quit..... TODAY!

anonymouscow

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Re: Best Day to Quit
« Reply #23 on: July 31, 2017, 01:15:45 PM »
I would factor in social security since it is calculated based on your 35 years of highest earnings.

If it was later in the year you would probably want to finish out the year.

Much Fishing to Do

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Re: Best Day to Quit
« Reply #24 on: July 31, 2017, 01:19:37 PM »
Today

sol

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Re: Best Day to Quit
« Reply #25 on: July 31, 2017, 04:00:15 PM »
-- If you leave before reaching minimum retirement age and 20 yrs of service (i.e., resign instead of retiring), your unused sick leave does not count as creditable service.

The benefits specialist I just spoke with told me it still counts towards your years of service as long as you take a deferred retirement.  She also said all of your credited SL would be returned to you of you ever rejoined federal service, and suggested that I get a job as a clerk typist for 12 months when I am 57 so that I can reactivate all of my retirement benefits, like fehb and life insurance.

Monkey Uncle

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Re: Best Day to Quit
« Reply #26 on: July 31, 2017, 07:01:19 PM »
-- If you leave before reaching minimum retirement age and 20 yrs of service (i.e., resign instead of retiring), your unused sick leave does not count as creditable service.

The benefits specialist I just spoke with told me it still counts towards your years of service as long as you take a deferred retirement.  She also said all of your credited SL would be returned to you of you ever rejoined federal service, and suggested that I get a job as a clerk typist for 12 months when I am 57 so that I can reactivate all of my retirement benefits, like fehb and life insurance.

Fedweek says unused sick leave doesn't count toward years of service under deferred retirement.  They might be wrong, as might your benefits specialist.  A few seconds of googling didn't turn up anything from OPM that addresses the issue.

http://www.fedweek.com/reg-jones-experts-view/deferred-vs-postponed-annuities-2/