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Quitting your job - a transition checklist

Al Waller: By now, we’ve all seen the headlines about what has become dubbed “the Great Resignation,” and for good reason. According to the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey (JOLTS), more than 4 million U.S. workers since April 2021, have on average quit their jobs every month. That’s just incredible!

Quitting a job is a highly personal decision and one that I think most will agree really should not be taken lightly and should be done the right way and involve some serious soul searching, planning, and follow-through. Once you’ve made that big decision or you’re pretty close to it, it’s probably a pretty good idea to have a checklist to help ensure a smooth transition for you and your soon-to-be former employer.

Welcome back to ClearPath – Your Roadmap to Health & Wealth SM. I’m your host, Al Waller. With me is Catherine Collinson, CEO and president of nonprofit Transamerica Institute®. In this podcast, we’ll actually both be sharing our insights and expertise on what to include on your transition checklist.

Catherine, it’s great to have you back on the show.

Catherine Collinson: Hi, Al. It’s great to be here. And if you’re up for it, I’d like to call on you to answer some of our opening questions. Our listeners know you as our show host, but they may not be aware that you’ve enjoyed a decades-long career as a Human Resources executive and consultant.

I’m thinking that a well-developed checklist should involve a number of major categories – especially when and how one goes about severing the ties, giving notice, and saying farewell to their employer. Are you up for it? Can you share your sage insights?

Al Waller: I am indeed, and I'd be happy to weigh in on this because let's face it separating from an employer isn’t always easy and, over the years, I’ve seen people go about it the right way – by exiting gracefully and professionally. And then I have seen some real dumpster fires where people have really gone about it just the wrong way and have either deliberately or impulsively burned some bridges – not something I'd recommend doing in this robust job market. At the end of the day, taking the high road is typically your best way to travel.

Catherine Collinson: Al, you are so right. In my own life experience, I have learned that it’s a small, small world. You never know who you will cross paths with in the future. There could be 160 million people in the U.S. labor force, but I guarantee you’ll run into former bosses and colleagues down the road. You may not know when or where, but I guarantee it will happen.

What are your tips for someone orchestrating their departure?

Al Waller: I could not agree with you more. I mean, the world is becoming a much smaller place and it's amazing what will follow you. I think folks would be very wise to measure their actions as they exit their place of employment – and yes, the word “orchestrate” is the operative term to use when departing, since it's up to the individual to really think through a plan. Believe me, it will involve a lot of moving parts and careful communications. So, here you go. If you're ready, here are some of my recommendations.

To lead off, review and familiarize yourself with your employer's employee handbook, specifically regarding policies and procedures related to resignations. I know a lot of times people get the handbook and it’s shoved on a bookshelf and never sees the light of day. But you should really take a look at that before you do make this move. This will enable you to avoid potential minefields, and at the same time, you're demonstrating a level of respect for your employer.

Next would be to provide at least two weeks’ notice of your departure or more if your original employment contract specified such. Now there may be some legal room depending upon the circumstances. Talk it over and be prepared though to honor your commitment by doing the right thing.

In addition to writing a formal resignation letter or email, carefully think through your communications. For example, it's advisable to communicate with your manager and your HR Department first – before you tell the rest of your colleagues. They may have some ideas about how they want to have this news disseminated.

Catherine Collinson: So, you are telling our listeners and ourselves best to communicate closely with your employer about your departure before you send that email blast to everyone that you know.

Al Waller: I think it's just more respectful. Let them get ahead of it – put the face on it that they may want to. Personal story – I didn't do that with a company, and the person who was the head of our group was kind of upset with me. I had a lot of respect for the person, but I think I was young and a little impulsive – thinking “hey, I'm out of here and I've got this great opportunity” and didn't do that the right way. So, try to use a little self-restraint and be sensitive to that.

Next though, I'd say offer to put together a transition plan for your work assignments and offer to assist with that transition. The key here is to make this transition as painless and as seamless as possible.

Finally, if requested, I'd advise participating in an exit interview about your experience with the organization and basically what prompted you to leave. This is also an opportunity to share any comments or concerns, as well as ask any questions of your own. But here again, make sure you keep your comments measured and constructive.

Catherine Collinson: These are really helpful tips. There's some other logistics involved with transitioning away from an employer, especially if you've been with that employer for a long time. What are some of these logistics that people should anticipate and plan for?

Al Waller: That's a great question especially because there's an element of timing involved. For example, some things you may want to plan for in advance. So, let's unpack this.

You mentioned company equipment. If you have any company provided equipment, say for instance, a computer, your employer will request you to return it along with your ID badge, office keys, and if applicable, a company credit card. They typically have a checklist, which will provide you with instructions for returning that.

Next, company computer files – you may need to clean up your company computer files. If that's the case, it's best to seek instruction from your employer about “if” and “how” to accomplish this to ensure the appropriate retention of records.

Another area that comes into play would be personal effects. If you're working onsite and have brought in personal items – anything from family photos or plaques, etc., – you may want to retrieve them before you give notice. Does that make sense, Catherine?

Catherine Collinson: That's a really good point, especially if you've been with an employer for a while. It's easy to accumulate a lot of photos, memorabilia, and stuff. You may want to do that spring cleaning before you give notice versus having to pack it all up at the very end – which can just be time consuming and added weight on your situation as you're trying to transition – especially if you're looking to transition as smoothly and quickly as possible.

Al Waller: Exactly. And while most employers will want you to stay for the entire two-week notice period, if you happen to be going to work for a competitor, they may very well request that you leave immediately – and see that you do. But at least the upside on that is they will typically compensate you for those two weeks off that you would have provided notice.

Another thing to keep in mind is that many employers strongly discourage – if not outright prohibit – the use of company email or computers for personal use. If you've been doing this all along, shame on you. This could become a pretty delicate situation down the road. But that being the case, if you want to take the personal correspondence or files with you, it's best to ask your employer’s permission.

For that matter a good practice is to avoid mixing company time and hardware with your personal businesses in the future. In this case, it's best to be upfront – this employer may have an established process for retrieving it. But if they say no, then you really should respect it.

Catherine Collinson: These are all a lot of considerations for people to think about.

What about a farewell party for the person leaving and their coworkers? It's really important to have an opportunity to celebrate and say “goodbye”. It can bring closure for everyone and set the stage for new chapters. However, my understanding is some employers do have farewell parties. Others don't. What's your take on this?

Al Waller: Well, I think as you point out, it runs the gamut here. Farewell parties, I agree – it's nice closure for those who are leaving and for those who are remaining. And while employment isn't permanent certainly, especially in this day and age, friendships can and do sometimes stretch well beyond the workplace and sometimes having a celebration can generate a lot of “goodwill” at the end. It can be in person or depending upon today's circumstances – it could be by way of a video conference too.

Now, I will add a lot of employers support this. However, some don't because sometimes the circumstances, frankly, just don't lend themselves to it. So, if your employer doesn't offer this, you might consider inviting your favorite colleagues out for coffee or a lunch – host a gathering on your own. As noted, these gatherings can bring closure and also strengthen those friendships that you've established and want to maintain.

Catherine Collinson: Great insights, Al. We've talked about a lot of do’s – the things that you should do when planning your transition. I bet there's some big no-no’s out there too. What are some of the big “no-no’s” that you suggest people avoid through the process?

Al Waller: Oh yes. We don't have a lot of time here, but I'll just touch on a few. Beyond the obvious, you want to avoid being negative. Be gracious and positive. Maybe the ending wasn't as great as you would have hoped it to be but try to keep it on the upbeat side.

As we mentioned earlier, you don't want to burn your bridges by dropping some verbal bombs on the way out the door to settle scores with your employer. No matter how justifiable they may be, they could wind up coming back to haunt you – and ultimately hurt you down the road. So again, my advice here is always try to take the high road.

Now, Catherine, let's turn the tables back here with our conversation heading into that of transitioning employer benefits – since really this is more of your area of expertise. Fair enough?

Catherine Collinson: Sounds like a plan.

Al Waller: Let's start off with this: What do people need to think about regarding their benefits in general?

Catherine Collinson: There are a number of things to think about and again, it's just so important to have that transition checklist – so that you'll be able to do your homework and check things off.

One of the first things is your paid time off for vacation days. If you have any unused paid time off, most employers are required to pay it when you leave. This should appear in your final paycheck or a separate check shortly thereafter. So, you want to keep tabs on that – that's money!

The second thing is your health insurance. This is an especially important area for doing your homework. Mihaela has talked with you about this many times on our podcast, and it's really important to do your homework – know the options available and the costs involved.

Your options will likely include Cobra for up to eighteen months for you and any others covered under the plan. There’s the ability to purchase health insurance in the marketplace, at healthcare.gov and local providers – and if you're changing jobs, your new employer's healthcare plan. If you are changing jobs, that's probably going to be your scenario, but it's important to know what all your options are – and how to go about enrolling.

Al Waller: Catherine, if I could just jump in here too – I think also making sure that you're aware of what the eligibility is to pick up benefits with your new employer because some may start Day 1 – others may start 30, 60, or 90 days down the road. So, you want to be able to prepare so that you're not left exposed, right?

Catherine Collinson: That's a really great point, and a lot of people – if they're changing jobs, may take a break. They may decide to take a month off and go on that long overdue vacation. You want to make – especially if you're going on vacation – you want to make sure that you're covered from the time that you leave employment to the time that you would be covered under a new employer's plan. So, that's a really great point, Al.

The next thing, which is related to health insurance – and that we've talked about on the show – are Health Savings Accounts. Your Health Savings Account – if you are contributing to one, that is portable. You may be able to keep your balance with your current provider or roll it over to a new provider or your new employer’s provider if they offer an HSA. The important thing is to do your homework and don't lose track of that account. Remember, you're transitioning, there are a lot of moving parts, and it can be easy to lose track of things.

Then the last benefit that I wanted to touch on as it relates to health is Flexible Spending Accounts or FSAs. They have different rules from HSAs. Depending on the type of FSA that you have, the rules could be different. In some situations, it could be a “use it” or “lose it” when you leave your employer, meaning that you need to spend it down. So, check on your FSA. Check on the rules to avoid any surprises. And have a good game plan when you transition.

A plug for our previous episodes on health insurance, open enrollment, HSAs – check out our previous episodes of ClearPath – Your Roadmap to Health & Wealth. Mihaela goes into great detail, and I chime in every once in a while, as well.

Al Waller: That's a lot of homework and planning to consider, which only underscores the importance of having that checklist. What about retirement benefits – could you shed some light on that?

Catherine Collinson: Indeed. In a nutshell, if you are participating in a 401(k) or similar plan, you're going to have 4 options:

  • Keep your 401(k) savings with your former employer if that's permitted.
  • Roll the savings over into an Individual Retirement Account or IRA.
  • Roll the savings over into your new employer's 401(k) if they have one and if it's allowed.
  • Or —and I highly recommend AGAINST this— cash out the account and be subject to income taxes and a possible 10% penalty if you are under age 59½.

These are your options. It's really important to do your homework.
I also want to flag a potential issue to take into consideration. If you have taken a loan from your 401(k) – if you have an outstanding loan balance – when you leave employment, typically, there is a certain amount of time that you have to repay that loan. You're ultimately repaying yourself, but you've got to be able to repay that loan timely. Otherwise, if you miss that deadline, it could be treated as an early distribution – and subject to income taxes and that 10% penalty if you're under age 59½.

In a prior episode of ClearPath – Your Roadmap to Health & Wealth a few months ago, we went into great depth on all the details and nuances of these decisions. So, for our listeners who are interested in learning more, I invite you to check it out.

Al Waller: We sure did. They may want to revisit that segment for sure. Now could you walk us through some of the other benefits such as say life insurance and other voluntary benefits?

Catherine Collinson: With regard to these benefits, check with your employer's provider to find out if any of them are portable, meaning that you can continue coverage after you leave your employer.

For example, you might be able to keep some life insurance policies by paying the full premium yourself and still get the benefit of the group rate your employer has. This is true for some types of voluntary insurance benefits but not all. So, you've got to contact your employer's provider and find out what's available to you.

Al Waller: Good to know, Catherine. Any final words of wisdom before we sign off today?

Catherine Collinson: Of course…yes, I do. This is going to sound really basic, but it's super important and many people, frankly, forget this step. That is…make sure your employer and those benefits providers have your contact information. At some point in time either now or in the future, they may want to reach you.

Lastly, Al, you and I have talked about it – we can't underscore enough how careful planning and following a checklist can lead to smoother transitions for you and your soon-to-be former employer – and staying positive throughout the process can pay tremendous benefits and dividends in the long run.

So, as we wrap up this conversation, Al, I want you to join me in wishing everyone the greatest success as they're planning their transitions – if not now, perhaps at some point in the future.

Al Waller: I'm with you on that, Catherine. As always, sage advice – and great to have you with us.

We hope you’ll join us for future episodes. As mentioned, previous episodes covering topics we discussed today are Health Savings Accounts Explained and The Great Resignation – Options for Your 401(k).

ClearPath – Your Roadmap to Health & Wealth is brought to you by Transamerica Institute, a nonprofit private foundation dedicated to identifying, researching, and educating the public about retirement security and the intersections of health and financial well-being. You can find our weekly podcast on WYPR’s website and mobile app, wherever you get your podcasts, and at transamericainstitute.org.

ClearPath – Your Roadmap to Health & Wealth is produced by the Transamerica Institute with assistance from WYPR.

If you have comments or feedback, please reach out to [email protected].

Until the next time, I’m your host Al Waller. Stay safe, be well and thanks for listening.

The information provided here is for educational purposes only and should not be construed as insurance, securities, ERISA, tax, investment, legal, medical, or financial advice or guidance.

Al Waller is a long-time Baltimore native and employment expert with a 30-year career in leading and advising locally and globally based corporations on matters including: Talent Acquisition and Retention, Employee Relations, Training and Development.
Catherine Collinson is the founding president and CEO of nonprofit Transamerica Institute and its Transamerica Center for Retirement Studies, and she is a champion for Americans who are at risk of not achieving a financially secure retirement. With two decades of retirement industry-related experience, Catherine is a nationally recognized voice on workforce, aging, and retirement trends. She was named a 2018 Influencer in Aging by PBS’ Next Avenue. In 2016, she was honored with a Hero Award from Women’s Institute for a Secure Retirement (WISER) for her tireless efforts in helping improve retirement security among women.