Maximize Your Lump Sum Relocation Package with Our Expert Tips

When you’re moving for a new job, a lump sum relocation package from your employer can help cover some (and maybe all!) of your moving expenses.

To help you maximize your lump sum relocation package—and simplify your move—we put together the below guide to making every dollar of your lump sum relocation package count. We’ll walk you through:

• Understanding your lump sum relocation package and the moving expenses it can cover

• The pros and cons of a lump sum relocation package—so you can maximize the benefits and minimize the downsides to plan an easy, stress-free move

• Tips for negotiating a lump sum relocation package that covers as many major expenses as possible

• Strategies for managing your lump sum relocation package like an expert (and avoiding unexpected costs!)

What Is a Lump Sum Relocation Package?

And What Does It Cover?

A lump sum relocation package is a specific dollar amount that an employer offers an employee to defray expenses around relocating for work. Employers offer these benefits as perks to both attract new employees and compensate current employees who are being promoted or relocated.

Although every organization has its own guidelines, when receiving a lump sum reimbursement, employees are generally responsible for managing the move on their own. They can use that lump sum as they wish to cover things like:

• Moving their household goods and vehicles
• Hiring a professional moving company to handle the move, including packing and unpacking services
• Transportation to the new destination (airfare, gas, hotels, etc.)
• Temporary housing while looking for a more permanent living situation
• Other housing costs, such as those associated with selling and buying a home

Do Employees Generally Get Their Lump Sum Up Front?

It depends on the employer. Some are willing to advance the lump sum to their employee to help minimize their out-of-pocket expenses. Other employers may wait until the employee starts their new job before paying out the agreed-upon amount, essentially reimbursing the employee.

What Other Types of Relocation Arrangements Do Employers Offer?

In addition to a lump sum relocation package, employers may also offer the following types of relocation agreements:

1. Reimbursement, in which the company agrees to pay the employee back for a specific list of moving expenses.

1. In-house coordination, in which the company arranges and pays for the employee’s relocation. Employees may also be given an extra relocation allowance for certain covered expenses.

1. An outsourced corporate move to a relocation company, in which the employer puts its employee in touch with a relocation management company who will handle the move from start to finish. In these circumstances, employers generally pay the relocation company directly, so employees don’t have to worry about tracking expenses or filing for reimbursement.

Negotiation Tips for Lump Sum Relocation Packages

Some employers may establish set rules for their lump sum relocations. For example, lump sums may be previously determined based on job title, whether or not the employee owns their home, length of tenure with the company, distance of the relocation, etc.

However, there might be some flexibility for you to negotiate your lump sum relocation package. Below, we’ll offer you some tips to use when hammering out your lump sum relocation with your employer.

Does your employer adjust their lump sum payouts for higher cost-of-living origin points or destinations? If you’re moving to or from an HCOL area, you might be able to ask your employer for a larger lump sum. For example, moving in or out of a place like New York City or Los Angeles, CA can be significantly more expensive than other U.S. destinations. Internationally, countries like Switzerland or Singapore can be pricey where moving is concerned—among other higher-cost international spots.

To bolster your case for a higher lump sum, consider researching cost-of-living statistics to show to your employer. Numbeo and BestPlaces are a good place to start.

If you want to work out a higher lump sum payment with your employer, a quote from a reputable moving provider will also offer a valuable data point. In fact, we’d suggest going a step further and getting quotes from three, independent relocation companies.

That way, you’ll enter your negotiation with solid evidence for how much a move like yours will cost, which may help you make the case for a higher lump sum than initially offered.

In some cases, your employer may ask you to move on a short timeline, which puts you in a good position to negotiate your benefits. Some full-service moving companies offer packing and unpacking services, which can make it significantly easier when you’re short on time. (Packing and unpacking services are also great if you’re busy!)

If your employer is asking you for a speedy relocation, see if they’re willing to offer a lump sum reimbursement that will also cover packing and unpacking services. A professional moving company can quote you for these services while preparing your household move quote.

Maximizing Your Lump Sum Package

Finally, although a lump sum package relocation offers you the flexibility to plan your move how and when you want to, it also means you’ll have to manage your move carefully. Otherwise, you might end up paying more in out-of-pocket expenses than you planned. Below, we’ll offer a few tips for maximizing your lump sum and avoiding unexpected expenses. 

Once you have your moving quotes in hand—and you’ve got a final number for your lump sum—it’s time to sit down and put together a detailed budget. Make sure to take into account items like:

• The cost to move your household goods, plus any extras like packing services
• Transportation to your new destination (airfares, gas, hotels, etc.)
• Pet transportation costs
• Vehicle transportation or storage costs (if applicable)
• Housing costs at your old home, such as necessary repairs before leaving
• Housing costs at your new home, like security deposits, brokers’ fees, or anything other necessary expenses to secure new housing
• Utility set-up fees at your new home
• Childcare expenses and school expenses to get your children established in your new home

The more detailed your budget, the better you can plan for your costs—especially any that might be coming out of your pocket—and avoid any surprises or shortfalls.

Are Lump Sum Relocation Payments Taxable?

Yes, a lump sum relocation payment will be considered taxable income by the IRS. Employers are required to include these payments within employees’ wages, and you will be expected to pay taxes on these payments.

(By the way, it doesn’t matter if your employer provides the money up front or reimburses you after the fact. It still counts as taxable income, according to the IRS.)

One exception: If you’re a member of the U.S. Armed Forces on active duty moving on military orders, any qualified moving expense reimbursements will not be considered taxable income.

Many employers are willing to gross-up a lump sum—i.e., add some extra money on top of the reimbursement to cover the accompanying taxes. If this is not the case for your employer, make sure to account for any potential tax liability come April 15.

Your lump sum relocation benefits package will come with a set of guidelines, and it’s important for you to familiarize yourself with them.

Can a Company Make You Pay Back Your Relocation Package?

Many companies require employees to remain with the company for a specified amount of time after receiving a lump sum relocation package. If you leave before the agreed time, you pay be required to pay back some (or all) of your lump sum. After agreeing to a lump sum relocation—and before making your next career move—review your employer’s rules to avoid a clawback.

When it comes to lump sum relocation packages, it can be tempting to go with the cheapest option available. (And pocket any “extra” left over!)

Rather than making price your sole determining factor, we suggest looking at a few factors as you vet each moving company you’re considering:

• Level of experience and number of moves: Experienced companies with plenty of moves under their belt know how to avoid challenges—and minimize them if they crop up. Put that experience to work for you by looking at each company’s track record before making a decision.

• Existing partnerships all over the globe: No moving company can be absolutely everywhere, so long-distance moving companies use “partners” to cover some geographic areas. If your moving company has done moves in your area before, they’ll already know the best partners to work with, which will set you up for an excellent moving experience.

• Services offered: As we mentioned earlier, services like packing and unpacking can add significant ease to your move, but not all providers will offer these services—or execute them with the same level of care. Consider each provider carefully in this arena as well.

The wrong moving company can add a bunch of extra work to your move—or cost you extra money to “fix” any problems they create. Vet your moving company carefully to set the stage for a simple and easy relocation.

Making the Most of Your Relocation Package

Lump sum relocation packages can be a great perk for defraying the moving costs associated with a new position. Although these types of packages take careful planning and management, they can help you make a smoother transition to your new home, ready to tackle your new position.

DeWitt Move: A Safe, Easy, and Affordable Solution for Lump Sum Moves

If you’re managing your own lump sum relocation, the DeWitt Move team would love to assist. We can help with both domestic moves (including Alaska and Hawaii!) and international moves. We’ll also custom-tailor a relocation package for your needs, so we can also help you stay within your budget.

To get started, reach out today for a complimentary quote. We look forward to helping you plan a safe, easy, and affordable move with your lump sum relocation package.