• October 2013

Moving? Here's a Personal Finance Checklist for Your Review

By Howard Pressman, CFP®
Financial Planner
Egan, Berger & Weiner, LLC
email: hpressman@ebwllc.com

Are you thinking about moving to another state? What personal finance considerations should you consider? Before pulling up stakes, be sure to give thought to:

  • What’s the best way to handle switching bank accounts?
  • When is it a good idea to roll over a 401(k)?
  • How soon should creditors be notified of an address change?

Here are some important financial decisions to consider:

1. Consider the cost-of-living in potential states. If you’re moving to another state due to a job change, you may not have a choice in your new state. If, however, you’re moving for retirement or a change of scenery, do your research.

Costs to fund your lifestyle can vary widely from one area to another. For instance, if you’re moving from Tulsa, Okla., to Manhattan, your morning coffee could cost you 61 percent more, to say nothing of housing costs, which can be as much as a whopping 500 percent higher.

2. Go slow before buying a new home. I typically do not recommend that people buy a new home before relocating. It is important to get a sense of the various neighborhoods, their personalities and idiosyncrasies before making such a large commitment.

Consider renting while you get to know your new location. When you find an area you love, then you can start looking for your new home.

3. Have your estate plan reviewed and updated by an attorney in your new state. Different states have different laws and taxes; it would be a shame if your intentions were disregarded because of different laws.

4. Are you moving due to a job change? If so, your moving expenses may be tax-deductible.

Of course you must follow the rules, but generally if your new job or new job location is at least 50 miles farther from your prior home than your old job was, you may be able to deduct your moving expenses.

For example: If your prior commute was 10 miles, the commute from your old home to your new job must be at least 60 miles. You’ll also need to be working full-time right away. Talk to a CPA for more details on this, and make certain that you keep your receipts.

Note: While any gains that you enjoy on the sale of your home may be taxable—provided that they exceed $250,000 for single homeowners or $500,000 for married homeowners—losses on the sale of a home are not deductible unfortunately.

5. Switching bank accounts may not be necessary. These days, many of the larger banks have coast-to-coast footprints. If you’re a customer of one of the large banks, check to see if your bank has branches in your new state.

As soon as you’re living at your new address, call your bank to have your address changed. Ask if you’ll need to close your old accounts and open new ones. Even though your bank may have a branch in your new town, technology constraints may prevent the branch from efficiently communicating with the account in your previous state. This is especially an issue for recently merged banks and can be frustrating for customers.

If you are a customer of a small bank or credit union, it is likely that you’ll have to switch. Open your new account early and transfer in some money. Make sure that you leave enough money in your old account to cover any outstanding checks and debits.

Remember to change the account information for any automatic debits that you may have. I recommend leaving the old account open for a few months just to make sure.

If you have a safe deposit box, be certain to gather the contents before leaving town.

6. Update your address with other financial institutions with which you do business. Some common examples are:

  • IRAs and investment accounts;
  • college savings plans;
  • life, auto, and liability insurance companies;
  • loans, including auto and student; and
  • credit cards.

You typically do not need to notify the credit reporting bureaus of an address change; your creditors will do this for you once you’ve notified them. It is a good idea to check your credit reports about 45 days later, just to make certain this happened.

For help, log onto www.annualcreditreport.com for a free credit report. Be sure to notify the Social Security Administration of your address change, and it’s a good idea to let the local taxing authority in your old location know, too—especially if it levies a personal property tax. Filing a change-of-address form with the Post Office will help ensure that anything that may have slipped through the cracks finds its way to you for up to one year.

7. Rollover your previous employer’s retirement plan. If your location change is due to a new job, notify your old HR department as soon as you know your new address, and make certain the records show that you have terminated employment. This will help the transfer process move along smoothly. If you have an existing IRA, you should consider adding in the funds from your old employer’s plan.

8. If you do not have an IRA, consider opening one. Either way, you can initiate the rollover by contacting the custodian of the old plan. You can find their contact information on your account statement. Tell them that you would like to rollover the proceeds to your IRA. They will be able to tell you what is required to process the transfer.

If your old plan has a vesting schedule, you should know this ahead of time. You don’t want to be blindsided to learn that you’re not getting all of the funds in your account. Asking your prior employer for a Summary Plan Description is the best way to get the details.

As always, it makes sense to get some professional advice during this time, as there may be tax issues or planning opportunities that go along with this life event. If you already work with a financial planner, he or she can assist you in this transition.

Good luck!


About Howard Pressman

  • 16 years of experience in the financial industry
  • Georgetown University Financial Planning graduate
  • CERTIFIED FINANCIAL PLANNER™ Practitioner
  • Financial Planning Association National Capital Area chapter board member

Howard Pressman has written numerous articles on financial planning for local newspapers and for the CFP® board’s newsletter. He volunteers with several local nonprofit organizations, lecturing and teaching financial planning basics to families who may not otherwise have access to a financial planner. Pressman is a lifelong Washingtonian and lives on Capitol Hill with his wife, Erica, and their daughter, Tali.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, which it awards to individuals who successfully complete CFP board’s initial and ongoing certification requirements.