Ten Mistakes Employees Make With Corporate Benefits

Ten Mistakes Employees Make With Corporate Benefits

1. Do not say no to the full employer 401(k) matching. Instead, please make sure you contribute up to the amount to ensure the full capture of these funds. Why turn down free money? I also highly recommend you strive to maximize your 401(k) contributions every year (in 2015: $18,000 with an additional “catch-up” contribution of $6,000 if over age 50). You avoid taxes on every dollar you contribute and the money stays tax-deferred and compounds until retirement.

2. Do not dismiss enrolling in the flexible spending accounts for health care and dependent care (generally for children under age 13 if you have any). You can save federal income taxes, state income taxes (if applicable), and Social Security and Medicare taxes. If you are in a higher tax bracket, the cumulative tax savings can be over 50% of the amount you choose to contribute to an FSA. The FSA for health care limit is $2,550 in 2015 and the FSA for child care remains at $5,000. 3. I see more and more companies moving toward high-deductible health insurance plans that come with health savings accounts. If you enroll in such a plan you should be maximizing your contributions into your HSA ($3,350 singles, $6,650 family in 2015; and an additional $1,000 for people over age 55). Many companies contribute a certain amount into your HSA, so the same concept as in the 401(k) matching applies here: Do not say no to the free money! 4. Do not automatically dismiss enrolling in employee stock-purchase plans. Some companies allow employees to buy company stock at a discount that can be 10% to 15% lower than market value. Sometimes the market value can be determined as the lower of two dates, with one of these dates being six months earlier. 5. Do not say no to the disability plan offered to you, especially if you have no individual disability insurance policy of your own. Any cost to you will be well worth it to ensure continued income stream if you satisfy the disability definition criteria of the plan.