You're asked for a salary range which straddles the Highly Compensated Employee number. Do you;

Give a number at or just below the HCE number or,
Give a range where the HCE is in the bottom third?

Caveat; you're leaving a position [very solid] with a private company which provides 28 days vacation per year for a position with a well established publicly owned company where vacation begins at 10 days, you want to max out your 401K, and negotiating for additional vacation days or vested stock options is not an option. (Dollar wise you're looking at a 35% raise but also leaving a defined pension plan (public company does not have a defined pension).)

Both companies are aviation related and will not go out of business in your lifetime.

I'm not sure I understand the question, but if I am understanding it right, I'd think about their total package (vacation, etc), what I think their quality of life will be like, etc, and figure out what would be an acceptable number to work there. That is the number I'd give them, and I wouldn't worry HCE or anything. This is what I feel I am worth in this position. YMMV.

quote:

Originally posted by slosig:
I'm not sure I understand the question, but if I am understanding it right, I'd think about their total package (vacation, etc), what I think their quality of life will be like, etc, and figure out what would be an acceptable number to work there. That is the number I'd give them, and I wouldn't worry HCE or anything. This is what I feel I am worth in this position. YMMV.

Updated original. Hopefully it'll help.

Quality of life (job related), commute, job stress, hours, etc are similar.

Slosig,

Also, if you earn $119,999 you can give up to $18k into a 401k, if you earn $120,001 you can only put in 6% ($11k delta) per year.

Did you go looking for them or did they come looking for you? It matters.

quote:

Originally posted by elde:
Did you go looking for them or did they come looking for you? It matters.

They're poaching me and a dollar/ range has taken that into consideration.

As an ExHR Mgr for global org I'd absolutely recommend option 2: HCE in bottom third. If that number turns them off then, IMO, your future earnings/opportunities are limited in that org. Secondly, with all due respect, in reality what have you got to lose?

(Worth what you paid for it.)

Have you crunched the numbers to see how much you are losing by leaving the defined pension plan?

I have learned in life that the "first glance" and "gut feeling" usually is the best long term outcome.

With that, I see a near 50/50.

Then the "long term established devil you know" vs the "what if/green grass" in the next pasture.

and the "unknowns" of your particular situation.

I would stay where I am.


Other opportunities will come again, but if the "handhold" you have a solid grasp on is let go, there is almost never going back.


And I realize all of that might seem esoteric, but one would have to see it from my vantage point to understand.

If nothing else, take time to get away to a quiet place and really let your mind and life experiences "speak" to you.

And my best wishes and hope that you get the proper clarity.

quote:

Originally posted by LS1 GTO:
Give a number at or just below the HCE number or,
Give a range where the HCE is in the bottom third?

Option 2

If you go with Option 1, you're accepting a ceiling

With Option 2, you're saying that you value yourself and asking how much they value you. You're also saying that you expect to reach you're higher number during your time there

quote:

Originally posted by LS1 GTO:
Slosig,

Also, if you earn $119,999 you can give up to $18k into a 401k, if you earn $120,001 you can only put in 6% ($11k delta) per year.

You may be misunderstanding this. 18k is the limit you can contribute into a 401k. It's a government reg. It increased to 18,500 for 2018.
If you're 50 years old, you can contribute an addition 6,000 per year.

You can also always save extra into a roth ira. A previous company automatically funneled your contribution into a roth ira account when you go over your yearly limits.

As far as the salary range, i would give it back to them. They looked for you. They make you an offer. If you're happy with it, take it.

What you can do is say something to the effect that you won't nickel and dime them. Meaning that if they give you a number and it's within your range, you'll take it. They may just want to avoid the situation where you'll automatically ask for more on top of whatever number they give you.

They have a target salary they want to give you. Make them give you that number. You don't have much to gain by giving them a number. If you give a number below their target, you save them money and you left money on the table. If you give a number higher than their target, they'll just offer you their target or even a bit lower to give themselves some negotiating room.

It's poor negotiations to be the first to give a number.

I also like 9mm's answer above with option 2.

quote:

Originally posted by Rey HRH:

quote:

Originally posted by LS1 GTO:
Slosig,

Also, if you earn $119,999 you can give up to $18k into a 401k, if you earn $120,001 you can only put in 6% ($11k delta) per year.

You may be misunderstanding this. 18k is the limit you can contribute into a 401k. It's a government reg. It increased to 18,500 for 2018.
If you're 50 years old, you can contribute an addition 6,000 per year.

You can also always save extra into a roth ira. A previous company automatically funneled your contribution into a roth ira account when you go over your yearly limits.

As far as the salary range, i would give it back to them. They looked for you. They make you an offer. If you're happy with it, take it.

What you can do is say something to the effect that you won't nickel and dime them. Meaning that if they give you a number and it's within your range, you'll take it. They may just want to avoid the situation where you'll automatically ask for more on top of whatever number they give you.

They have a target salary they want to give you. Make them give you that number. You don't have much to gain by giving them a number. If you give a number below their target, you save them money and you left money on the table. If you give a number higher than their target, they'll just offer you their target or even a bit lower to give themselves some negotiating room.

It's poor negotiations to be the first to give a number.

I also like 9mm's answer above with option 2.

The OP isn’t clear, but I’m 95% sure he’s saying the new employers plan has a Highly Compensated Employee trigger/threshold of $120K in their plan design. It’s complicated, but in order to pass nondiscrimnation testing folks over that are limited, regardless of your cited general guidelines.

The more traditional route is to test each year and “refund” in the form of a distribution any excess. The OP plans approach is simpler and cheaper, but wouldn’t likely maximize contributions for the threshold HCE employees.

He will have zero control over that.

Regardless, I’d max the Comp.

My answer is based on your caveat.

In it, you appear to have issue with going to:

• a potentially less solid position
• a company with less vacation time available at start
• loss of a pension plan
• not being able to invest as much in your 401K as desired

So, does the 35% raise remove that heartburn, or is it still there? What number would eliminate that heartburn entirely? Start the low end of your range there (heartburn free) and go up. How bad do they want you?

Get the largest base possible in case the future growth rate flat lines.

Think of it this way.

You are working 7% more. 18 vacation days divided by ~250 working days per year. So you are really only at 28% increase. As a percentage of your salary what is the DB contributions worth, remembering that they are not linear and your lasts years of work my be adding huge chunks to the monthly pension. Are you at least fully vested now in DB plan? Will you give up all your previous years contributions by leaving?

Don't just look at the big number for the increase. Break it down and make sure it's really as big as it seems on paper.

I'm assuming both have 401k, do they both match equally? You can do a traditional or Roth IRA in addition to 401k if you are pushing Max contributions as HCE. Your new employer may even have the ability to make those payments for you via salary deduction or you may have to send the check monthly yourself.

Once again the OP's comments are a little murky but I like HRH's comments.
One question I didn't see answered is what is the company's 401k matching? Also take a look into who is administering the 401k. Some plans are much better than others.

My wife ran into the HCE situation with her company and after talking with the Owner the company decided to change their situation and went with a "Safe Harbor" plan. It cost them some money to set up but eliminates the cap and keeps the employees happy. I don't know how large the firm the OP is considering but it might be something that they could look into.

Congrats on being in this predicament. Could be a lot worse.
I would think hard about the pension. I am 4 years =/- from retiring. The cost of healthcare is my main deterrent.
Investments as you know are unpredictable, with occasional setbacks. I’ve known several people who had been at the point of retiring and due to the market had to keep working.
Pensions can offset this.
I just sat down with HR and went over my numbers. I was shocked when I saw my lump sum amount with only 12 years seniority.
I would consider the following.

1- do I enjoy what I do.
2- do I enjoy the workforce (there is always a moron).
3- Benefits
4- employee loyalty (rare now, but if you have a job you feel will see you through to retirement..)

Life is too short to dread going to work, so if you’re happy now, think hard on changing.

First, the 401k limit for 2018 is $18,500. No HCE removes that. Second, the catch-up for employees over 50 adds an additional $6,000 for 401k. That is all federal guidelines. If you are a HCE, which is a two part test (earn over $120,000 and be in the top 20% of all (gross) compensation.). Now, what you are referring to is the tax deduction. If you are a an HCE, you can still hit those limits, just not on the tax deduction side. So assuming you are under 50, you put 6% of your salary in a traditional 401k plan, and the balance would go via a Roth 401k (which earns $ tax free). You are not limited in other tax shelter methods, such as deferred compensation, HSA, or maxing your wife's 401k.

Furthermore, understand the value of your pension, and any benefits retiring with the current firm may bring. A good friend's wife resigned and took a job (teacher) at a private school to earn 5k more a year. She was 2 years shy of hitting a 50% payout, and 2 years shy of lifetime health benefits. She only has 14 years until 55, and the $70k pickup in salary likely cost her $300k in health benefits and reduced pension .

If you want to talk more, and want to be discreet, email me. If you want to talk directly, you can email me your phone number, and I'll call you back. This is kinda my bailywick.

I think providing a range is worse than a specific number, and comes across as weaker, as though you're afraid to ask for what you really want. Further, when someone gives me a range there is very little incentive to give them anything but the bottom end.

Also, losing 18 vacation days right off the bat is brutal, and if it were me they would be valued at 2-3x the amount of extra work days it's adding to your schedule. Which, to me, makes a 35% raise feel more like a mere 10%.

I'd rather they just make an offer, but if forced to pick one I'd pick a hefty but not ridiculous single number, which they're free to counter...

Probably depends on the pension structure. There are some pensions that are very generous and some that provide grocery money... maybe. You have to figure out what you are giving up there before you can accurately determine whether a 35% raise is a raise at all.

quote:

Originally posted by Georgeair:

The OP isn’t clear, but I’m 95% sure he’s saying the new employers plan has a Highly Compensated Employee trigger/threshold of $120K in their plan design. It’s complicated, but in order to pass nondiscrimnation testing folks over that are limited, regardless of your cited general guidelines.

The more traditional route is to test each year and “refund” in the form of a distribution any excess. The OP plans approach is simpler and cheaper, but wouldn’t likely maximize contributions for the threshold HCE employees.

He will have zero control over that.

Regardless, I’d max the Comp.

Yeah, thanks for that. Googled the HCE bit. It looks like it's dependent on the company and how much other people are putting into their 401k.

On the other hand, being that it's a public company, which means it's big enough, I really doubt everybody else is slacking so much that it would trigger this limitation. He's in CA, $120,000 is just enough to barely get by.