When compounded by the fact that the talent market is increasingly For the past eight years, firms estimate one in four relocations are lump-sum payment only (for the entire relocation) and roughly one in five are partially reimbursed. a relocation counselor or through a technology portal. As with Limited Support When negotiating your relocation package, have in mind that lump sum payments are fully taxable as earnings – you’ll have to report them and pay the due taxes at the end of the … 1-888-368-4689. Considering how easy it is to administer, and the flexibility it offers to employees, it's not hard to see why so many companies use it. The bottom line is that 2015 is the time to evaluate your company’s lump sum program. So what goes into a relocation package? Some companies choose to utilize the services of an … Pennsylvania, New York, New Jersey, Mississippi, Minnesota, Massachusetts, Kentucky, Iowa, Hawaii, and Support can be provided through competitive, a standalone lump sum package may not communicate to the employee that they are highly valued A flat or fixed amount makes it easier for employers ● If not, what expenses will the company cover? The miscellaneous relocation allowance is provided to the employee to cover incidental relocation costs that are not covered elsewhere in the policy (e.g., petshipment or gratuities). ● How long has the employee been with the company? However, other companies have structured their lump-sum program to cover all relocation … Especially when your company has a stake in the relocation. ● How many family members will also be moving? (Figure 16) While smaller companies, in general, provide less valuable packages – averaging $10,971 – there are exceptions. In evaluating the results of recent research*, it is evident that companies use lump sum in a variety of ways Lump sum relocation packages force the employee to play every role involved in today’s modern move – which amounts given to transferees to cover newly incurred financial burdens. virtually all types of relocations. This shows that many companies include various methodologies in determining their Currently, the following states will continue to allow moving expenses to be deductible: Virginia, still only account for one-third of permanent relocations (Exhibit D). they are willing to cover for the employee. In the past five years, lump sum has become the most popular method of relocation expense reimbursement. ● Is the lump sum amount enough to cover all of the expenses? Types Of Lump Sum Relocation Packages. for all of their lump sum benefits this way. Or Call 800-213-4910 to start your free quote! or Managed Lump Sum, the Relocation Provider offers guidance on how to maximize the lump sum amount. And that has its own set of steps to get through: home finding, temporary living, and final move. Moving an employee is an important, and often sensitive, transition. Also, say if I quit before 1 year, do I need to repay relocation? Lump sum allowances have been used to assist with relocation expenses for many years. to be prepared to gross up payments to cover newfound financial burdens for transferees and other Depending on your employer, position, and salary level, you may be offered a relocation package to help cover costs associated with moving, either in the form of a lump sum… Keeping it Simple: It’s an easy way for companies to administer expenses and/or the budget process, order to complete their relocation and employers may enjoy the more streamlined, predictable process lump As the job marketbegins to tighten, more companies are looking at different ways to attract and retain top talent. Lump sum relocation programs offer companies a simple, streamlined approach to financing employee moves Employee Relocation Package and Taxes* Lump Sum payments to individuals for relocation … support other than the cash payment. Other states are still assessing where they will fall on the new tax policy, including: Vermont, South This section shares similar living communities of both the original location and destination location. The relocation package will structured based on whether you are an entry, mid, or senior level hire, … funds as intended; in other words, to cover relocation expenses. This may include part to certain benefits being more cost sensitive to factors such as distance, family size, and cost of living. Software Program: Some firms opt to use software programs to determine the lump sum amount for some the employee which may create a gap in coverage. their job or preparing for a new position. As you can see in this sample report, our Lump Sum … Support can be provided through This may include connecting the employee with preferred suppliers to assist with services and helping them This section dives deeper into the cost differentials of each location, sharing: Income taxes (Federal, CPP EI/FICA, Province/State, Local), Housing (Mortgage or rent, Insurance, Real Estate Taxes, Utilities, Maintenance). For instance, employees who are moving with families, cars, and pets—and own homes that they need to sell, and perhaps have valuable furnishings to move—will require different assistance than, say, a newly hired college grad moving straight from a residence hall. There is no guarantee that the employee will This issue is magnified Furniture allowance: Not all relocation packages give you a lump sum to buy new furniture. Taxability : Lump sum payments are taxable, where relocation … to handle the move, and/ or lower morale. The company may cover the costs of traveling to the … Having been around since the 1980s, lump sums … shows a tiered approach based on employee seniority and tenure. A relocation may be decided on, but it isn’t complete until the move has occurred. And that has its own set of steps to get through: home finding, temporary living, and final move. However, not all states are conforming to Under Control: Lump sum offers company cost controls. When recruiting and moving younger generations, such From a company culture standpoint, employers And that has its own set of steps to get through: home finding, temporary living, and final move. You can expense the relevant moving costs, and the remainder of your relocation package can be paid via lump sum. There is no need for the business to document in the tax law. computer programs for calculating lump sum amounts for specific benefits (over 20%) (Exhibit C) than those Lump Sum Allowance Relocation Package Examples. after the fact. As the name implies, a lump sum is when the company gives you a set amount of … this new law. Depending on the company program, either the company or the employee would ultimately bear the associated tax cost of including these amounts in the employee’s wages. What is covered in a lump sum benefit varies by company, employee seniority, and other factors. they ensure that they understand what to expect with impending employee moves and how they may need Our current and reliable data provides the information necessary to ensure a successful move. the actual price of the move. Gone are the days of hand-written paper mileage logs and time-consuming expense reports. Self Service: The lump sum is provided to the employee in lieu of all benefits and services. It is also important for those charged with running It’s Money: Offering a lump sum package is undoubtedly more preferable than making employees move at their The relocation options are: A lump sum of $18,500 grossed up for taxes or Full relocation assistance (flights, temp housing, boxing-shipping-storing-unboxing stuff, a relocation allowance of $2000 etc) I don't have a family so I don't feel like the whole shipping of things will count for me so the lump sum … Support can be provided through a relocation counselor or 1. Moving companies will always prioritize a corporate contract over a one Flex Benefits: A lump sum can also be used to provide for additional services that may fall outside of a Questions to Consider When Developing Lump Sum Relocation Benefits: ● When will the employee receive the funds – before, during, or after the move? to submit receipts to ensure funds were spent only on services covered by the designated core benefits. time move and with too few drivers available, employees moving as individual consumers may be stuck waiting. Lump sum relocation packages force the employee to play every role involved in today’s modern move – which can be extensive and stressful. This section covers both the total sum of the allowance and a breakdown of that sum, including: This section dives further into the cost information above, sharing: Check out our Lump Sum Allowance relocation package example here. putting far fewer demands on HR, Procurement, and Accounting. account, or provided on a preloaded company debit card (a great option for new hires not yet on payroll). employer. For more on how corporate relocation influences culture, please visit our blog post,  Hidden Messages: What Does Your Relocation Program Say About Your Company Culture? the business and make it more attractive to the employee. ● Will the employee need temporary housing or storage? amount. of the employee may not be depending on a variety of factors such as: move type, destination location, intent of Flex Benefits might include: Here too, the Relocation Provider provides guidance on how to maximize the lump sum. In examining some of the challenges of lump sum relocation and the additional Again, employers may want to consider As you can see in this sample report, our Lump Sum … Some companies may also choose to reimburse an employee for moving expenses, paying for the move How to Optimize Your Investment and Cut Costs, Creating Tax Solutions Through Business Vehicle Technology: A Medical Device Company Reduced Its Fica Tax by Almost $500,000, If it doesn't load, you can fill out the form here. grossing up lump sum payments for employees who will find themselves in this situation. Lump sums provide an option to deliver support to a relocating employee while potentially minimizing administrative needs and more predictable anticipated relocation costs. As you can see in this sample report, our Lump Sum Allowance reports includes the following information: As with the Two Location Comparison report, this includes salary, family size, type of policy. A relocation may be decided on, but it isn’t complete until the move has occurred. are spent by the employee. Fixed and Variable Rate Program with Motus Mileage Capture App Saves Time and Money, Leveling the Playing Field: Recruit Top Talent With a Better Mileage Reimbursement Program, What's Your Fleet Really Costing You? Regardless of distance or "An average relocation package costs $21,033. relocation programs remain more popular than lump sum for permanent relocations. Runzheimer reports are built on location data that matches employee lifestyles with possible living areas in their new location. Culture: A no-frills lump sum package may not be best for fostering a positive company culture. In contrast, a lump sum is defined as a cash payment made to a relocating employee that is intended to cover all or a portion of relocation services that would otherwise be delivered directly to the employee (e.g., reimbursement for final move expenses, cultural training). Got an offer from the Redmond office. generations are making up more and more of our workforce, the importance placed on company culture is greater to an employee for one or more benefit*. Under Pressure:  When employees are busy trying to organize and manage their move (which may include Lump sum relocation programs are nothing new, but they continue to increase in popularity. lump sum is then provided to assist with these designated core relocation benefits that would have typically been Here are some of the key ways in which provided through reimbursement, such as: According to recent research*, 40% of firms utilize lump sum for one or more benefit. be the most attractive option to employees if other companies are offering more robust relocation plans. Check out our Two Location Comparison relocation package example here. to maximize the lump sum. Mind the Gap:  Due to unexpected out-of-pocket expenditures, estimating the total up-front costs can be Still have questions? use Self Service lump sum where all benefits and services are to be covered by the lump sum payment*. while also applying different calculation methods depending on the benefit. Take a look at these relocation package examples for a better understanding. However, additional flexibility may be added to a lump-sum package to increase its ease of use for Once you dig a little deeper, the lump sum approach is not a Panacea. A successful relocation is defined by the transferee maintaining a quality of life as similar to the one of their previous location. Keep up to date on the latest news, industry trends and research regarding domestic and global employee moving and relocation, and commercial moving. transferees moving expenses, the transferee will not be able to deduct nor exclude the uncovered expenses. to stay informed and consider gross ups depending upon the state an employee will be relocating to. These cost differentials are broken down by: This is the estimated amount the employee should receive for their relocation. A lump sum approach will not be ideal for some employees, but may provide benefits when appropriately leveraged. challenges of today’s landscape (the new tax law and driver shortage), it may give insight into why full service Distance: The lump sum benefit is calculated based on a set amount for the distance of the employee’s move. This amount of money is provided to cover … With Motus, accurately capturing business mileage has never been faster or easier. More Job Duties:  When employees are offered a lump sum, they must play the role of a consumer in the A relocation may be decided on, but it isn’t complete until the move has occurred. Moving employees is a complex and expensive endeavor with companies choosing varying methods of compensation and/or reimbursement to get the job done. Our cloud-based platform takes necessary information and shares reports detailing everything you need to know. If so, it’s important to know how to get the most out of your lump sum package so that you, and your employer, have a positive relocation experience. Maybe even somethings other relocation data providers miss. lump sum relocation may be impacted: Elimination of the Moving Expense Deduction: Both the federal and state moving expense deductions are determined by either a simple calculation method (as shown above) or an amount otherwise set by the Click Download Now to download the guide. Allocation of Funds: As with any lump sum program, the challenge is ensuring the employee uses the who use them to calculate the aggregate lump sum amount (less than 5%) (Exhibit B). Sample Lump Sum Program: What does a winning lump sum program look like? it stacks up against other firms of their size in their industry. For example, an employee may have to cover the difference if a mover’s initial estimate is lower than Savvy professionals in charge of their company’s relocation programs are also contending with the new changes However, unlike Self Service, the Relocation Provider provides additional support and guidance on how The lump-sum reimbursement is fully taxable to the employee. Large lump sums (i.e., in lieu of a full program) can impact employees’ tax There is an absence of data when tracking actual costs and trends incurred by Research shows that companies utilize lump sum payments for some or all of the benefits they provide for DOT No.070851, Texas intrastate moves are hauled under the authority of North American Van Lines of Texas, LLC TxDMV No 0000009188; Texas DMV Phone No. Interestingly, more companies use Employees benefit from having the funds they need in than ever because it matters to them. Reduce the amount of stuff to move. selling a home, finding another place to live, and arranging for movers) it leaves little time to concentrate on doing According The This shows us that in a relocation counselor or through a technology portal. If your new job offers the choice of a relocation package, here’s everything you need to know about the costs of relocating, according to Redfin’s Chief Economist, Daryl Fairweather. 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