How to Build an Employee Relocation Package

Posted by Darlene Mase on Jan 19, 2018 1:55:32 PM

This is a guest post, written by Darlene Mass, a writer for the apartment rental site, Zumper.com. 

build an employee relocation packageWhen an employee is offered a promotion in another city or the company transfers and the employee needs to relocate, employers will often offer a relocation package. While employers are not obligated to provide relocation packages, it can incentivize a valuable employee to relocate to a new city and help to keep them working at your company.  

As an employer, one of your top priorities should be ensuring that your employee has a smooth transition during their relocation. Here are a few tips on how to make your employees’ relocations as stress-free as possible:

Provide an employee relocation package.

Corporate relocation is on the rise, and perhaps your business would benefit from relocating an employee to another city. If so, you need to start thinking about relocation packages for your employees.

There are many surveys out there that try to determine the average cost of a relocation package, and they can range anywhere from $20,000 to $100,000. However, your employees will appreciate whatever support you can provide. Smaller companies or companies who relocate a lot of mid-level or recent grads, tend to provide less valuable packages.

While it’s difficult to know the specifics of the relocation package until you know the employee and the assignment, it’s important to have an idea of what you want your relocation package to include. Here are a few examples of things commonly included in company relocation packages.

  • Orientation Trip: Some employees, especially expats, will travel to the new location to familiarize themselves with the area and investigate accommodation options. The orientation trip costs generally include hotels, meals, airfare and ground transportation.

  • Transportation and Moving Costs: Companies may reimburse travel expenses to the new location including airfare, cost of gas, or train tickets. Cross country movers and other moving-related expenses may also be part of the package. Some companies may even hire professionals to do a full packing and unpacking of the expat’s belongings.

  • Home Sale / Lease Break Costs: Any costs associated with either purchasing a new home, selling a current home, or breaking a lease are sometimes included as part of a higher-tier relocation package.

  • Spousal Support: Again, in some higher-level employee moves, if the relocating employee is married, a company will provide spousal support. Which can include: helping the spouse find a job or establish their own business.

Benefits included in the package for employee relocation vary greatly depending upon the circumstance, company or employer.

Additionally, some employers offer a relocation bonus. These bonuses are typically paid as an incentive for the employee to agree to relocation or if the employer recognizes that the cost of living is higher in the new location compared to the employee’s current area. Relocation bonuses are a one-time deal and oftentimes have to be paid back if the employee leaves the company before a certain period of time.

Even the most well thought out employee relocation package may need a little tweaking. You won’t know exactly what your employee needs until it’s time for them to relocate, so keep an open mind, and be willing to negotiate and adjust the package accordingly.Be willing to negotiate on the employee relocation package.

Most employers choose to negotiate relocation packages instead of salaries. Relocation costs are a one-time expense whereas salaries are recurring.

Know which method of relocation expense reimbursement to use.

There are three primary ways in which corporations disperse money to relocating employees: lump sums, capped allowance plans (also known as direct bill), or a core/flex program.

When a company gives a relocating employee a lump sum, they are essentially giving them a signing bonus to use for relocation purposes. If the employee does not use the entire lump sum, they get to pocket the rest.

Capped allowances set a limit as to how much the employee can spend on a relocation. The employer usually pays for these expenses by way of direct bill. If money is left over, the employee does not get to keep it.

A core/flex plan includes a combination of both direct bill and lump sum. This means companies have a policy that has some expenses covered through direct bill, like household good moves or temporary housing, and for things that can’t be direct billed, the employee is either reimbursed or simply given a lump sum.

Enlist help from a relocation technology company.

Looking for a place to live, hiring movers and flying to a new destination are all things that only add to the stress of an employee’s relocation. Technology companies, like UrbanBound, can help streamline this process by automating moving to-dos in one central platform.

Plus, relocation management software can also take the pressure off of your internal HR department.

Conclusion

A lot of behind-the-scenes work goes into successfully relocating an employee from one town or country to another. If relocation is in the air at your business, it’s time to start thinking about building out a relocation package!

 

Topics: Relocation Policy, Recruiting

[2017 Holiday Video] It's the Most UrbanBound Time of the Year!

Posted by Ryne Inman on Dec 20, 2017 8:58:32 AM

UrbanBound Holiday Video 2017Now what would this season be without UrbanBound's annual wish to you and your team, through song and dance, for a happy holiday?

Luckily we already answered the question for you, and the answer is: Nothing. This season would be nothing without UrbanBound's annual holiday video.

While the tradition of the UrbanBound clan bopping around to holiday songs carries on throughout the years, some things haven't changed.

For one, the team has yet to perfect our angelic harmonies and near-professional dance choreography...but thankfully our spirit and enthusiasm makes up for what we lack in those other non-important things. (And in case you were wondering, we are looking for new additions to the UB Choir. More on that here.)

While the close of another year marks the end of our 2017 chapter, we don't want to turn the page before thanking everyone who was a part of making this year such an important part of UrbanBound's history.

We are incredibly grateful for our strong partnerships and network of customers, suppliers, colleagues, and friends.

 

Yep, in case you didn't get the memo, we're coming to town (and no, it's not for dance and vocal lessons). Get ready for a year full of new features, continued, education, relocation trends, and much more. 

We thank you all for being part of what made 2017 such a success, and we look forward to what lies ahead in 2018!

Happy holidays from our family to yours—we wish you the happiest new year.

 

Topics: UB News

2018 Tax Reform: What You Need to Know

Posted by Abby Baumann on Dec 18, 2017 5:35:27 PM

2018 tax reformOver the last few weeks, the headlines have been filled with coverage about the “TaxCuts and Jobs Act” bill. Discussion has focused on issues ranging from the number of tax brackets to the child tax credit and the alternative minimum tax. The final bill is expected to pass this week, and there are a number of impacts to businesses in America—including changes to how relocation benefits are taxed.

Here is what you need to know about how relocation taxes will change.

The Moving Deduction

For the past 20 years, certain moving expenses associated with relocating for a new job have been considered deductible for individuals, given they meet the time and distance tests. These qualifying expenses (household good moves, storage, auto shipments and final travel) have also been considered excludable, if paid for directly by the employer.

Tax Reform 2018: Eliminating the Moving Deduction

The proposed tax bill will eliminate the moving expense deduction (with the exception of military moves) which would make the following moving expenses taxable: household goods moves, storage, auto shipments and final travel. This means there will be significant tax liability for you or your relocating employees starting January 1, 2018.  

As we wait for the final bill to pass, there are a few things you can do to prepare.

Pay Outstanding Relocation Invoices By the End of the Year

If you are currently offering direct bill benefits to take advantage of tax exclusions, we recommend that you pay any outstanding household goods, final travel, in-transit storage and auto-shipment invoices before the end of the year. If the invoice is paid in 2017, it will follow 2017 tax laws, and will be considered excludable. The IRS does not consider services to be a relocation benefit to the employee until the employer pays for the service on the employee’s behalf. That is why any expenses incurred in 2017 but paid in 2018 may be subject to 2018 tax laws.

Decide How to Help In-Progress Relocations

If the tax bill passes, companies will need to reevaluate their current relocation policies, especially ones that only cover current deductible expenses. Because the bill will make formerly deductible relocation expenses taxable, there will be a new tax liability with your relocation policies. You’ll want to start reviewing your policies to decide how you want to handle this tax liability—especially for your ongoing relocations.

relocation for tech companies

Grossing up the tax liability will provide the best experience for your relocating employees. Grossing up means that the company estimates the tax liability and pays the IRS for the estimated amount on behalf of their relocating employee. If the tax bill passes, it will go into effect January 1st, so you will need to decide what to do with employees who are already in the process of relocating. For employees who were expecting to receive a tax deductible benefit, you should strongly consider grossing the tax liability up, in order to avoid unexpected taxes for these individuals.

Revisit Your Current Policies and Reallocate Money to Your Relocation Budget

Just like you need to reevaluate your policies for ongoing relocations, you also want to begin evaluating long term changes to relocation. The first decision you'll need to make will be if you will gross-up or withhold on taxable relocation benefits. As mentioned above, grossing up provides a better experience for the employee. If you're asking employees to relocate and take on all tax liability for their relocation, you may find it harder to attract and retain top talent.

In addition to deciding to gross-up or withhold, you may also revisit your current benefit structure. Many companies have structured policies to maximize tax excludable benefits by offering direct bill. With these benefits becoming taxable, it may be tempting to switch to a lump sum. However, a lump sum offers no insight to employers about how much an employee is spending or on what it is they are spending. With direct bill benefits in place, companies can control costs by paying only for the services the employee uses. It also helps employers budget for future relocation. For employees, direct bill mitigates out-of-pocket costs and connects them with high-quality, vetted service providers.

Looking Ahead: 2018 Tax Reform

In the changing landscape of relocation, empowering companies with the solutions to manage, track, and control relocation costs will become increasingly important. There are many variables that come with this new tax reform, but one thing we know for sure is that technology is only going to become more important for the relocation industry. Remember to keep technology at the top of mind as you prepare for the upcoming changes.

UrbanBound will continue to follow this bill closely and will keep you updated once the final bill is passed. Please continue to check back for more advice on how to prepare for 2018 tax reform.

Streamline employee relocation today. Request a demo! 

 

 

Topics: Relocation, Relocation Taxes

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