How do you evaluate a relocation bonus vs a lump sum offer in relation to your career goals? (2024)

FAQs

How do you evaluate a relocation bonus vs a lump sum offer in relation to your career goals? ›

The final factor to consider when comparing a relocation bonus vs a lump sum offer is how they will impact your long-term career goals and financial security. A relocation bonus may seem more attractive in the short term, as it can help you cover your immediate moving expenses and reduce your stress.

According to Dwellworks, the typical lump sum received in a relocation package is around $7,200, primarily for travel costs. If the company covers the entire relocation, that lump sum averaged around $12,000.

Relocation bonuses are not and should not be expected from all companies. What is a typical relocation bonus? A typical relocation bonus can vary from $2,000 to more than $10,000 depending on the company and the position.

To create a relocation moving budget, start with the facts, such as the distance of your move, whether you plan to hire movers, the size of your move (in the number of bedrooms), and your move date. Then, you can factor in the estimated costs of each moving expense.

A generous relocation package covers all moving expenses and will give employees ample time to find their new home. ARC Relocation can help with various factors associated with relocation. This includes finding movers to assist with your employee's relocation, packing and unpacking services, and vehicle shipping.

The actual cost of your move depends on your personal situation. $5,000 – $15,000 is an entry level management position or similar. This is a DIY move, you will likely not be able to afford professional movers or temporary housing. These moves often have out of pocket costs, and are stressful.

Typical relocation packages usually include temporary lodging expenses, the cost of moving, job assistance for your spouse, traveling costs, and assistance in selling your home.

1: Relocation Benefits Are Considered Taxable Income

It doesn't matter if the funds are paid upfront in a lump sum, as after-the-fact reimbursem*nts, or even if the employer pays vendors directly.

Formula #1 – The Flat Method

The flat method uses a flat percentage calculated on the taxable expenses and then added to the income. For example, an employer may gross-up at a rate of 25% for taxable expenses. If the employee is owed $1,000, the gross-up would be 25% of this, or $250.

How do I maximize my relocation bonus? ›

The less stuff you have to move, the less you will pay. Tip: When deciding what to keep and what to get rid of, have a floor plan of your new home or apartment handy, and refer to it often. This helps ensure you don't waste your relocation bonus moving things that will not fit in your new residence.

Relocation packages can range in worth from $2,000 to $100,000. What services and the amount of money you decide to cover is entirely up to you and your company. However, keep in mind that the more you are willing to give, the harder it may be for a candidate to refuse your offer when you negotiate moving expenses!

The specifics of a relocation package can depend on several factors, including the company's financial resources, the employee's length of service, and whether the employee owns or rents their home. Typically, a relocation package will cover several key expenses: Moving and storing furnishings and household goods.

Relocation Lump Sum Tax

For example, if a salary is \$80,000 and a lump sum of \$10,000 is provided, the earnings for that year are counted as \$90,000 The employee would not only have to pay their income tax bill on their salary but, a percentage of tax would also have to be paid on the lump sum.

Like a recruitment incentive, a relocation incentive may not exceed 25 percent of the employee's annual rate of basic pay in effect at the beginning of the service period multiplied by the number of years (including fractions of a year) in the service period (not to exceed 4 years).

A lump sum relocation package is a financial allowance that a company offers an employee to help the employee relocate. Lump sum packages can help employees settle in and return to work faster because they provide more flexibility to move quickly into their new city and role.