401(k) · Insurance · Personal Finances

A New Gig

Today is my last day at StartupInc. When I joined four and a half years ago, we were a motley crew of sixteen. Now, we’re nearly 300. I joined shortly after the series A round and watched the company grow through B, C, and D rounds.

From my vantage point, the company’s trajectory is solid, up-and-to-the-right.

If things are looking so great, why am I leaving now?

There’s two things that I’m looking forward to: something new and something smaller. 

New: The startup I’m joining is in an industry I’ve never worked in: healthcare. The tech is Elixir/Phoenix, something I’ve only dabbled in. I’m excited for the learning I’m going to be doing.

Small: I’ll be engineer number five in a company of less than twenty employees. The company just closed their Series A (sound familiar?). I’m looking forward to another startup perspective. The engineering team is 100% remote, something that I probably wouldn’t have considered prior to the pandemic, but is now normal for me.

As I exit StartupInc, here are some of the financial decisions I’m facing.

Exercising Options

When I joined StartupInc, one component of my compensation was stock options. I took advantage of the early exercise benefit shortly after I joined StartupInc. Should the company continue on its path, my decision will bring significant tax benefits. If not, I’ll have a small tax loss for a future year. My mental accounting already wrote it off as taking a pay cut in my first year. If I had put off exercising until now, I’d be facing a prohibitive AMT bill.

I’ve received subsequent “anniversary” grants. I have 90 days to exercise any vested portion of those grants. I was talking to one of my soon-to-be former colleagues, and he asked me if I was planning on exercising more shares as I leave. I still believe in StartupInc, and I plan on exercising some of the vested shares, but not all. I’ll be walking away from the more recent grants that have a higher price, mostly because it would require a non-trivial amount of cash and I already have enough invested in StartupInc. I expect a higher AMT for 2021, but since my AMT will likely be less than my regular tax, it won’t matter.

Health Benefits

As I leave StartupInc, I’m leaving the high-deductible, HRA-funded plan and stepping back into a standard PPO-plan. It’s a different network: BC/BS instead of Cigna. I anticipate shenanigans of some of our current providers not being covered by the new plan. I’m confident we’ll navigate it fine.

Even though today’s my last day, my health benefits run through the end of October. My new benefits won’t start until November 1st. To complicate things, StartupInc’s benefit year is from 10/1 to 9/30. The super high deductible was reset today. We still have 100% access to the HRA for the rest of the month. Because the HRA balance matches the deductible, I don’t expect any out-of-pocket expenses.

Our FSA was reset as well. However, it does not continue through to the end of the month. It ends today. We have one day to spend a year’s worth of FSA. I’ve been stressing my wife out, trying to ensure any last minute dental work happens today. We’ll make a Costco run to stock up on glasses and contacts. Happily, we won’t need to pay anything back. Getting the dental work and glasses done on that day is a free lunch.

401(k)

My new place doesn’t offer a 401(k). They said that should hopefully change in January, but I’m not holding my breath. I know there won’t be a match, but at least having a 401(k) option is better than not having one. I plan on rolling my 401(k) balance from StartupInc’s plan into my self-employed 401(k) immediately. The StartupInc 401(k) has a .7% administration fee which costs me over $800/year. I’m excited to kill this fee. When I joined StartupInc, I was encouraged to roll my old 401(k)’s into the plan to help drive the administration fee down. I’m glad I passed on that bad deal.

So long, Principal and your stinky fees.

By rolling the funds into my self-employed 401(k), I’ll be bumping the plan into the “must file form 5500” territory. I’ve already been filing Form 5500, but now it won’t be an option. The backdoor Roth has been great, but if Congress ends up getting rid of it, I’ll probably roll the self-employed 401(k) back into an IRA to make my life easier.

Other Benefits

There are other, smaller benefits that I’ll be walking away from. For example, StartupInc uses 1Password Business, which means everyone gets a free Family account. When my work account gets disabled, I’ll need to start paying my own way. It will end up costing me $6/month. I’ll probably stick with it since it’s so useful. Who knows? Maybe I can get my new employer to pay for it.

6 thoughts on “A New Gig

  1. Congrats on the new job. I wish you the best of luck!

    The FSA deadline sounds stressful.

    I just recommended that a friend set up a 401k for a 38-firm business with Employee Fiduciary: https://www.employeefiduciary.com/401k-plan-pricing

    They are well reviewed on Bogleheads and incredibly cheap. Perhaps you can suggest the new firm implement something similar?

    1. Thanks for the tip! I’ll check it out.

      We made it through the FSA deadline successfully. Worthy of it’s own post or at least part of October’s monthly update.

  2. Congrats on the new job. My last job at Megacorp was cheap and cut off benefits on the last day of employment. I left mid-month but benefits at Newcorp didn’t start until the beginning of the next month (new hire policy). So I ended up having to pay COBRA coverage for the partial month (I didn’t want a gap in coverage).

    Draining FSAs can be a pain. My kid needs ortho work and I put it on the no-interest payment plan. Last year, I pre-paid a bit more than the payment schedule which made it easy to fully drain my FSA.

    1. Thanks for the comment.

      Ortho work is a great way to drain FSAs. It’s also pretty easy to gauge how much you’ll need to spend and how far in the future so FSAs work out well.

  3. What a memorable time we spent together at StartupInc. I’ll forever remember the sick burns we ripped on one another whilst at lunch, the outrageous questions/schemes we hatched, and the loss of the greatest Peruvian chicken restaurant.

    Best of luck to you in the journey ahead!

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