A lump sum relocation package is an allotted amount of money that a company provides to employees when a corporate relocation is required. If you work with corporate transferees and relocation administrators you know “lump sums” are employer-provided funds meant to assist with one or more relocation expense items. Call our moving experts today! A Mobility Magazine survey uncovered some interesting facts about how companies are managing their lump sum corporate relocation packages. Companies often underestimate moving costs, so they end up paying more in the long run. These are four primary types of lump sum relocation packages you may want to consider. Employers are encouraged to assist employees in the relocation process through recommended suppliers and advice. Lump sum relocation processes offer three main advantages. Lump sum programs give employees more control over this new stage of their lives. Employers may also cover moving expenses by dealing directly with corporate moving companies. All basic packages appear to cover, at the very least, airfare to the … The employee initially pays for all moving costs, and the employer reimburses the employee for all relocation expenses. The most experienced corporate movers understand how to plan a relocation move on a required schedule and can design a plan that meets the amount allowed by lump sum relocation packages. Cash lump sum. Lump sum relocation packages became popular in the 1980s and are now one of the most common methods of providing corporate moving expenses. Any suggestion on the best way to do so? Employers have the final say on what they will reimburse their employees. This often translates to increased frustration or even bitterness towards you as an employer--especially if your relocating employees know anyone whose employers provided them with AVOs, BVOs, or other buy-out options. When it comes down to it, a lump sum employee relocation package often represents moderate initial savings. All of the tech giants offer either a lump sum or relocation package option (except for Apple, which offers a sort of hybrid). All Rights Reserved. That's about the lowest acceptable relocation bonus. Employees make their own wise decisions regarding their transition. Another prospect looms even larger for most employers: the difficulty of working with an employee who is trying to sell his or her old home. This payment allows employees to move their household and family on their own or seek the help of local corporate moving services or long distance corporate moving companies. Relocations and their financial implications can be complex and confusing. What Do You Know About The Different Types of Moves? Examples of these expenses could include: Lump sum relocation packages allow employees to prioritize needs and expenses according to the money available to them in the package. For employees, it places more control over the relocation in their hands and allows them to shop around for the most cost-effective relocation options. Employees should have clear communication with their employers before signing up for a lump sum relocation package. However, they do not cover the miscellaneous fees that arise along the way. … A lump sum relocation package is an allowance that a company gives to an employee to help them relocate for a new job opportunity. Lump sum packages are designed to help employees get … Temp Liv Lumpsum - $15,000. When employees are in control, they have a sense of ownership over their relocation moving process. This amount of money is provided to cover any packing, … For employers, it is not only easier to control costs with lump sum packages, but administration of these packages is also much simpler. Employees receiving some type of relocation benefit should always look into these services first when shopping for the best moving service to help them with their move! Our previous customers in Southern New Jersey speak highly of our above-and-beyond service. Some will cover just the basics, while others will transfer vehicles, provide cultural training, help pay closing costs or mortgage points buy down, or even provide employment assistance for an accompanying spouse or partner. Lump sum programs are typically time-consuming for employees. 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 year. Some are standard, but some will require negotiation. While this isn't necessarily true in every case, it happens more often than anyone would like; how do you know if it's true of what you offer your employees? An employee should use an honest moving company that can explain all the upfront costs and can provide an accurate estimate. A relo package can take the form of a lump sum, reimbursement, direct bill or third party relocation. Employees must keep all receipts of expenses so that their employer knows what they spent. Employers will pay an additional amount to cover the taxes accrued. To maximize this lump sum payment will require good management and the help of experienced corporate moving services that understand how such financial packages work. But a more well-handled employee relocation policy is actually an investment: an investment in your employee's loyalty and productivity, as well as an investment your business's future. The reimbursement option provides flexibility for both the employer and the employee, and the employee avoids paying additional taxes. Giving lump sums to employees takes out much of the grunt work for employers. Written agreements between the employee and employer would also make relocating more efficient and comprehensive for both parties. While employees go to their new jobs, their family members look for new jobs, sign up for school and create new social circles. With this form of payment, the employer is completely responsible for all corporate moving expenses. Typically, lump sum packages don’t cover: The money employees receive to relocate also does not cover the emotional cost on the family that no amount of money can repay. Option 2 - I have … selling their home, transporting their recreational vehicles, or child care. What Do You Know About The Different Types of Moves? Any amount of money received that is over the actual cost will be listed as employee income and be subject to taxes having to be paid on that amount. The company also saves the most money with managed lump sums. Employees need to research whether they will have to pay taxes on the money they receive. Even the smallest thing you do (and don't do) for your relocating employee during this time will have more impact than it would under less stressful, more routine circumstances. The lump-sum reimbursement is fully taxable to the employee. Though the employee has to pay for their move, they are not responsible for the tax burden, and it gives both the company and the employee flexibility during the process. Employees being relocated to new locations by employers may receive a lump sum employee relocation allowance to cover the cost of such a move. Additionally, the policy may be enhanced by authorizing the services of a relocation management company to assist them in spending their funds wisely. Lump sum packages are adjustable according to your company’s needs and are becoming more popular as companies move all over the world. 28 percent offer a lump-sum-only policy to some of their relocating employees, while 9 percent offer a lump-sum-only policy to all relocating employees. Employees can also negotiate their lump sum relocation packages if they are not satisfied with how much the company is willing to pay. Depending on a company’s needs, employee relocation packages can take various forms. With lump sum repayment plans, much of the responsibility falls on the employee, but employers can offer support through an online portal or a relocation consultant. These programs allocate a capped lump sum amount to the employee. As the name implies, a lump sum is when the company gives you a set amount of money to spend … Lump sum relocation packages obviously have their advantages. When a company provides a relocating employee with a lump sum, they're basically giving them a signing bonus that is intended to be used for the relocation process. Money saved the services of a relocation package is an allotted amount of money that company. Hefty income tax if their employers before signing up for a quote or for more information about navigating the sum... 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