Relocation assistance offer

Question

My wife recently got a job offer with a company in Georgia, and our family currently resides in Utah. They offered her a flat compensation of $5,000 after taxes as a lump sum to cover moving costs. We are pretty skeptical of the amount thinking that it wouldn't be enough to get us out there, on the premise that it is around 2000 miles apart.

I was under the impression that most companies would cover some sort of temporary housing so that you didn't have to stress about the amount of money that would take either.

My question is: - Does this sound like a typical relocation package for a company? and if not what is the best way to go about negotiating for a more fair offer?

Answer 1

Does this sound like a typical relocation package for a company? and if not what is the best way to go about negotiating for a more fair offer?

There's no "typical".

Some companies will reimburse all expenses in moving. Others will find a house for you. Some won't pay any relocation expenses at all. Others will offer a flat amount.

Like many benefits, this is likely negotiable.

If your wife feels strongly that $5,000 isn't enough, have her come up with a more appropriate amount. Present it to the Georgia company, along with the reasons why she feels she needs more (The more details the better. Real estimates from moving companies, etc would be best.). Then hope for the best.

If the entire job offer including the relocation package isn't sufficient, then she should turn down the offer and move on to other jobs.

I was under the impression that most companies would cover some sort of temporary housing so that you didn't have to stress about the amount of money that would take either.

Some will. Many won't.

Answer 2

In general relocation reimbursements are done one of two ways.

1. They pay your expenses in allowable categories or up to a company set limit in those categories; and if you meet the time and distance rules from the IRS they are tax free.

2. They pay an flat amount and you either pay for moving expenses, or spend it on whatever you want. Those program aren't tax free.

You will have to get estimates for how much it will take to get you and your stuff to the new city.

In general the amount of money they can pay tax free for shelter is very limited if they want to keep with the tax free program. Of course with a flat amount, and the mention of after taxes tells you they aren't keeping it a tax free program.

The IRS publication 521 Moving expenses explains what is covered and how to handle the situation if your expenses are more than the reimbursement.

Answer 3

I've made multiple cross country moves in the last few years. Assuming you do the work yourself (not hire a company to do all the organizing for you), packing and moving a 1 bedroom appartment from CA to NY cost me 3500, moving a car cost me 1100. Add in some temporary housing on both sides (a few hundred to a few thousand depending on how long and the area) and the flights themselves. 5K is a bit low, but its at the bottom end of what it costs- a single person could almost do it for that.

As for common- I've had everything covered plus 10K for expenses of rebuying things (from a top tech company) to 10K flat (negotiated with a startup) to nothing (but I was making the move anyway for personal reasons). You can likely negotiate that money up, or get a startup bonus added to make up for it if the amount is set by policy.

Answer 4

In last two US companies I worked for(although in India offices), Moving expenses and temporary housing are covered/handled differently. Just the moving expense is typically a lump sum amount as offered to your wife. Above that, companies usually give 2-4 weeks of temporary stay in a hotel or guest house to allow you sufficient time to find a permanent house.

Your wife can try to ask for both the components separately. The relocation amount is typically fixed based on the position of the new hire and they many not change that but anything is possible. You should definitely ask for temporary stay.

Another thing which companies generally provide is 'signing bonus' and in most cases it is to cover hidden cost of relocation. You guys can try asking for that but it differs greatly even within a company.

Answer 5

Your wife is right, $5K after taxes won't even come close to covering the cost of relocating a family from Utah to Georgia. I just relocated a two-bedroom apartment from Dallas to Seattle (2200 miles). We left most of our stuff behind, did the packing, and the moving fee alone was well over $5K. Add $1200/car you aren't driving. Plus mileage if you drive, temporary housing, and other one-time housing costs. In the short term, you will be burning cash for rental deposits, lease termination, etc.

Forget the lump sum, ask them to arrange and pay for the move, door to door, including packing, plus reimbursement of travel expenses and real estate transaction costs.