Relocation can sometimes require a lot of back-and-forth trips between the departure and destination locations. To help control the associated costs, most companies include language in their policies that define specific conditions under which employees are expected to drive or allowed to fly for home finding trips, return trips during temporary living, and final move.
This typically means a “mileage threshold.” If the distance between the two locations exceeds this threshold, the employee would be qualified to fly; anything under, the employee would be expected to drive. We’ve seen such thresholds range from 250 to 750 miles, with the most common being 500 miles.
However, in practice, the majority of companies that I have worked with indicate that employees will typically drive at least one or both cars during the final move because they need to transport pets or delicate items that they do not want to have shipped.
A quick glance at six different policies I’ve recently reviewed shows a wide variance in approaches to final move reimbursement. While all of the policies cite travel for the employee and family, five of the companies describe specific expenses, meals, lodging, and mileage thresholds:
— Distance thresholds cited by three of the companies are 450 or 500 miles (one company lowers the threshold to 250 miles for Executive-level employees)
— Mileage is based on the current IRS rate
— Meals are provided as either a per diem or up to a dollar limit
— The majority don’t use a per diem for lodging, stating either “reasonable lodging” or one night each in the old and new locations
Two of the companies include final move expenses as part of a lump sum allowance for a number of provisions. However, final move travel and lodging expenses are qualified moving expenses that may be deducted in a transferee’s tax return. Excluding them from a lump-sum payment will decrease the company’s gross-up cost, since final move travel and lodging expenses are normally excluded from taxable wages.
Lastly, it’s important to consider that while requiring employees to drive can reduce air travel and the related costs, driving for excessive distances increases the risks associated with long-distance travel (for example, falling asleep at the wheel, prolonged exposure to the Hannah Montana soundtrack if the kids are present, and the need for overnight stays in hotels).