Job offers, explained like you're 5

The parts of an offer

Five parts to add up the same way for every offer.

1. 01

   Base pay

   Base pay is the guaranteed salary or hourly pay for doing the job. Check how often it is paid and whether overtime, extra pay for extra hours, applies.

   What to compare

   • Compare guaranteed yearly pay
   • Compare pay dates and payment method
   • Check whether overtime applies

   Watch out for

   • A salary does not always answer the overtime question
   • Do not count possible overtime as guaranteed pay
2. 02

   Bonus

   A signing bonus is extra cash connected to starting work, while a yearly or performance bonus may depend on results. A guaranteed bonus is promised under stated terms, but a target is an aim and may not be paid. Check whether leaving could require paying a bonus back.

   What to compare

   • Separate guaranteed cash from target bonuses
   • Compare when each bonus is paid
   • Compare written bonus conditions

   Watch out for

   • A target is not a guarantee
   • A repayment term can reduce a signing bonus's value
   • Performance conditions may affect payment
3. 03

   Equity

   Equity can include stock options, which give a right to buy shares, and restricted stock, which is stock subject to conditions. A grant is the award, vesting means gaining ownership, a vesting schedule says when that happens, and a cliff is an early point before which nothing vests. Exercising an option means using the right to buy shares. Tax treatment depends on the equity type and your situation, so ask a tax professional.

   What to compare

   • Compare the equity type and grant documents
   • Compare what vests each year
   • Compare the vesting schedule and any cliff

   Watch out for

   • A grant is not the same as owned shares
   • Unvested equity may be lost when employment ends
   • Do not value equity or predict its price
4. 04

   Retirement benefits

   A 401(k) or 403(b) plan lets a worker save through the job. An employer match is money the employer adds when the worker contributes, while another employer contribution may not depend on worker contributions. Vesting means earning the right to keep the employer's part.

   What to compare

   • Compare employer match terms
   • Compare other employer contributions
   • Compare when employer contributions vest

   Watch out for

   • A match may require your own contribution
   • Employer contributions can follow plan terms
   • Unvested employer money may not stay with you
5. 05

   Health and other benefits

   Compare what the employer pays toward health, dental and vision coverage, and what the worker pays as a premium, the cost of coverage. Ask about health savings accounts and flexible spending accounts, which are accounts for eligible health costs. Also compare paid time off, life insurance, disability insurance and other benefits.

   What to compare

   • Compare employer payments toward coverage
   • Compare worker premiums and paid time off
   • Compare employer contributions to health accounts

   Watch out for

   • Coverage choices can have different worker costs
   • Account eligibility depends on plan details
   • Paid time off terms can differ

Rules to know

Retirement plan contribution limit, 2026

You can put up to $24,500 of your pay into a traditional or safe harbor 401(k) in 2026, the newest year the IRS lists. If the plan allows catch-up contributions, people age 50 or over at the end of the year can add $8,000 more in 2026 ($11,250 for ages 60 to 63). Your plan can set a lower limit.

401(k) and profit-sharing plan contribution limits | IRSchecked November 3, 2026

How employer contributions vest

In a 401(k) or other qualified defined contribution plan (government and some church plans aside), employer contributions, matches included, must vest at least as fast as one of two schedules: all at once after 3 years of service (cliff vesting), or step by step until fully vested after 6 years (graded vesting). These are the longest a plan can use, and a plan can vest faster, even immediately.

Issue snapshot: vesting schedules for matching contributions | IRSchecked November 3, 2026

How stock options are taxed

The IRS splits employee stock options into statutory options (incentive stock options and employee stock purchase plans) and nonstatutory options. A statutory option is generally not income when you get or exercise it, though exercising an incentive stock option can bring alternative minimum tax; you have income or a loss when you sell the stock. For most nonstatutory options there is no tax at grant, and the stock's value minus what you paid is income when you exercise.

Topic no. 427, Stock options | IRSchecked November 3, 2026

How to turn an offer into one number, step by step

1. Write the guaranteed yearly base pay and guaranteed cash
2. Mark each bonus that is only a target
3. List equity and retirement money that vests later
4. Add employer retirement contributions you expect to receive and keep
5. Add stated employer payments toward benefits
6. Use the same categories and assumptions for every offer