By Damian Davila …
Congratulations on your promotion! You’ve just made another step toward a successful future.
Still, this isn’t the time to become complacent. A promotion comes along with new challenges and tasks. To help you make the very best out of your new job, here are the 10 money moves to make after a promotion.
1. Revisit Your Tax Withholding
Most promotions don’t come with just a title upgrade, they come with a well-deserved raise. If that’s your case, calculate whether or not you need to adjust your W-4 form and submit it to your HR department.
Let’s assume that you file a joint return with your spouse and your combined taxable income was $90,000. Your tax due would be $18,293.75 ($5,156.25 + 25% of the amount over $37,450). After your promotion, your new combined taxable income is now $100,000. Your new tax bill is $21,071.25 ($18,481.25 + 28% of the amount over $90,750). Assuming no offsets to your salary bump and no changes to your W-4, you would be $2,777.50 short of your tax bill! (See also: Top Three Tax Facts to Know for 2016)
Use the IRS Withholding Calculator and determine if you need to update your W-4.
2. Calculate Vesting of Company Shares
Vested company shares are another way that your employer could reward you. Very often, these restricted stock units vest over time, meaning that you gain ownership of those shares the longer you stay. The idea is that your employer wants you to perform well and remain with the company. Contact your HR department to find out the vesting schedule of your company shares so that you know how much you would actually take with you if you were to part ways with your employer.
3. Time Profit Sharing and Bonus Checks
When your promotion includes a large bonus or profit sharing check, pay attention to the date that the
payment will be issued on. An elective deferral contribution to your retirement accounts must be deposited by the tax filing due date (April 19, 2016 for Maine and Massachusetts residents and April 18, 2016 for everybody else). For 2015 and 2016, the contribution limit to 401K, 403B, and most 457 plans is $18,000, and to regular and Roth IRA plans it’s $5,500. If you’re age 50 or over, you can make an additional $6,000 in catch-up contributions. When you haven’t met the applicable contribution limit, take advantage of that windfall to fatten up your retirement accounts.
4. Identify Additional Costs
With great power comes great responsibility, Peter Parker! Take stock of the responsibilities of your new position and determine how much additional time you may need to perform those tasks successfully. Having to stay a bit longer at work may increase several costs, including paying higher fees for babysitters or preschools, and dining out more often than before the promotion. Your first weeks in your new position will provide you an idea of how much your budget will need to adjust.
5. Determine …read more
Read more here: 10 Money Moves to Make After a Promotion