If you are employed, your firm or organization, which provides your employment benefits, may have an open enrollment period each year. This period typically consists of a few weeks or months that your employer gives you to make changes to your benefits. Most open enrollment periods occur during the fall, which allows you to make any necessary changes that will be effective in the upcoming calendar year.
If you are a new employee, these are the selections that you make on the employer supplied benefits form when you get hired. Every few years, it is important to go back and review the elections, especially as your finances evolve. Open enrollment may allow you to make changes to your health insurance, long term and short term disability, dental insurance, vision insurance, as well as your retirement plan contributions. A few exceptions are usually made for the open enrollment to come sooner in the case of adoption, divorce or marriage, death or birth. Here are some of the things you should review:
Beneficiary designations include the beneficiaries of your will, pension plan, insurance policy, or trust. As your finances evolve and as your life changes, these designations will need to change as well. It is important to keep up with any of the changes that may be required.
Examine your withholdings
Some of the questions that you need to ask to help you assess your withholdings include:
- Has your family changed in any way?
- Have you recently gotten married or divorced?
- Do you owe money?
- Did you recently receive a refund?
Finding out the answers to some of these questions will allow you to determine the right amount of withholdings that should be made from your payslip so that you do not owe or receive too much during tax time. Sadly, many people only fill their withholding form once.
Understand what you need from life insurance
Open enrollment is a great time to assess your life insurance plan to determine how much you are covered in case of an untimely death. If you are under or over covered, you may need to analyze your policy so that you can find out how much you require.
Your 401(k) or Roth 401(k) contributions
For you to claim to have a sound financial plan for your future, you need to manage your tax brackets and analysis. Your 401(k) or Roth 401(k) contributions have a huge impact on your taxable income and your tax scenario in the future.