Mobility Strategy - Market Practices

U.S. Domestic - Lump Sum

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1 © 2022 Graebel Companies, Inc. All Rights Reserved. This document contains CONFIDENTIAL information. Reproduction and distribution of this document in any manner or for any purpose is prohibited without the express written permission of Graebel Companies, Inc. U.S. Domestic Lump Sum – Market Practices Provision Market Practices Definition > Lump sum policies are designed to provide a cash allowance only to relocating employees. > It is strongly recommended that in addition to the lump sum, companies provide consulting support to help employees find vetted service providers and manage their relocation. Eligibility > Eligibility for lump sum programs is identical to other programs; many companies offer lump sums to more junior-level employees, but some may provide lump sums to most, if not all, relocating employees. Lump Sum > The one-time cash payment is typically intended to cover all of an employee's relocation expenses. > Many Relocation Management Companies (RMCs) provide an online, self-service tool for employees receiving a lump sum to guide them through the relocation process and manage their lump sum dollars. As noted above, some companies will also provide consultant support. > Some companies offer a set amount such as $5,000 USD to all lump sum-eligible employees, while others will customize the lump sum amount based on a variety of factors such as employee level, distance of the move, homeowner vs. renter status and/or family size. > Some companies will develop a lump sum "calculator" and apply a customized calculation to all lump sums provided. This ensures there is some "logic" behind the lump sum amounts. The calculator is often developed in partnership with the RMC. > For all but the lowest employee levels, it is common to see companies offer relocating employees a choice between a managed move or a lump sum-only move. Tax Assistance (Gross-up) > Gross-up of the cash lump sum is essential to ensure the relocating employee has sufficient funds to pay for relocation-related expenses. > Additionally, if the relocation benefits intended to be covered/paid for by the lump sum were to be delivered as benefits-in-kind, most companies would gross-up all taxable relocation benefits. > The most common gross-up methodology for lump sum payments is the standard U.S. supplemental rate. Repayment Agreement > Many companies use a two-year repayment agreement. > 100% repayment if leave the company within 12 months of relocating. > 50% repayment if leave the company within 13 – 23 months after relocating.

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