Frequently Asked Questions: Domestic Relocation

Designing a domestic relocation policy that balances cost control, compliance, and employee satisfaction is more critical than ever amid hybrid work models, rising housing costs, and evolving employee expectations. These Domestic Relocation FAQs answer common questions employers have when building or refining these programs. 

Quick Answers to Common Domestic Relocation FAQs: 

• What is a domestic relocation policy?
  

  A set of benefits and rules that support employees moving within the U.S.

• Why have a relocation policy?
  

  To ensure fairness, compliance, and cost control while improving retention.

• What types of relocation program models exist?
  

  Relocation program models include full-service, managed cap, core-flex, and lump sum programs.

• What are policy tiers?
  

  Relocation policy tiers are benefit levels determined by factors such as job grade or homeowner/renter status.

• What’s the most expensive relocation benefit?
  

  Home sale support is the most expensive relocation benefit, but it can be essential for the employee to accept the relocation.

• What is a Buyer Value Option (BVO)?
  

  A tax-efficient home sale program in which the employee finds a buyer, sells the home to the relocation company, and the relocation company completes the sale to the buyer.

• How long is temporary housing provided?
  

  Temporary housing is typically provided for 30–60 days, depending on the employee’s level.

• What is a Miscellaneous Expense Allowance (MEA)?
  

  An MEA is a flat stipend for expenses like pet transport or childcare.

• Are relocation benefits taxable?
  

  Yes, most are. Employers should provide gross-ups to protect employees.

• What other benefits are trending?
  

  Other trending benefits include COLA (cost-of-living allowance), home sale bonuses, spouse support, and pet relocation. 

Deep Dive into Domestic Relocation FAQs

1. What is a domestic relocation policy?

A framework that defines the scope, coverage, and terms of support provided to relocating employees. It ensures equitable treatment and clarity for both HR and employees. See Developing a Company Relocation Policy with an RMC for guidance on how RMCs can support policy development.

2. What program models are most common?

• Full-Service: Comprehensive support for executives or must-have employees.
• Managed Cap: A fixed, maximum budget for the move and guidance from the RMC to help the employee choose services and stay within the budget. 
• Core-Flex: Offers essential “core” benefits, such as moving household goods, and allows employees to select from various “flex” options, like home-finding assistance, to customize their move according to their specific needs.
• Lump Sum: A cash allowance that the employee can spend as they like to facilitate the move.

Refer to the model breakdown in Corporate Relocation: Structure & Tiers.

3. Why use policy tiers?

Policy tiers establish a clear structure for relocation benefits by matching support to employee level and needs. Executives may receive home sale assistance and extended temporary housing, while renters or new hires may receive lump sums or shorter-term perks.

Tiers also improve transparency, reducing confusion or resentment about who gets what, and they make administration easier by standardizing benefits across groups. This enhances cost control, consistency, and employee trust, while still allowing for flexibility in adjusting tiers as business needs evolve.

4. What is a Buyer Value Option (BVO)?

A Buyer Value Option (BVO) is a tax-protected home sale program used in employee relocations. Instead of the employee selling their home directly to the buyer, the relocation management company first purchases the home from the employee and then resells it to the buyer.

This two-step process ensures the transaction complies with IRS rules, which means the home sale benefit is not considered taxable income for the employee. For employers, a BVO reduces financial risk and helps employees accept relocation offers with greater confidence, as selling a home is often the most stressful and expensive part of the moving process.

5. Are relocation benefits taxable?

Yes. Under current U.S. tax law, most relocation benefits are considered taxable income to the employee. This includes common benefits like household goods shipment, temporary housing, and final move expenses. Without adjustments, these amounts are added to the employee’s W-2 income and can increase their tax liability.

To prevent employees from being financially penalized, many companies provide tax assistance (gross-ups). Gross-ups are additional payments that cover the taxes owed, so employees receive the full intended value of their relocation package.

6. What additional benefits are trending?

Beyond core relocation support, many employers are adding supplemental benefits to stay competitive and improve the employee experience:

• Cost of Living Allowances (COLA): Payments that help employees adjust to higher-cost destinations, sometimes phased out over time.
• Home Sale Bonuses: Incentives that encourage employees to accept reasonable offers quickly, reducing inventory costs for employers.
• Spouse/Partner Assistance: Career or adjustment support to help families settle in successfully, which is critical to relocation acceptance.
• Pet Relocation Support: Coverage for transporting pets, now increasingly expected as employees see pets as family members.

These enhancements can make relocation policies more attractive and better aligned with employee expectations in today’s workforce.

7. How do RMCs enhance relocation programs?

RMCs act as strategic partners rather than just service vendors. They bring expertise, resources, and technology that most organizations don’t have in-house. Key ways they enhance relocation programs include:

• Policy Development and Benchmarking: RMCs help companies design or refresh relocation policies by sharing best practices, benchmarking against industry standards, and tailoring benefits to talent goals.
• Supplier Network Management: They manage vetted networks of movers, real estate agents, temporary housing providers, and other specialists, ensuring quality and negotiated volume discounts.
• Logistics Coordination: RMCs oversee the entire relocation process end-to-end, from home sale to household goods shipping to settling-in services, reducing administrative burden on HR teams.
• Compliance & Tax Guidance: They ensure relocations remain compliant with tax regulations, payroll rules, and data privacy standards.
• Technology & Reporting: RMCs provide dashboards and reporting tools that give HR visibility into costs, timelines, and employee satisfaction, improving program transparency.

In short, an RMC becomes an extension of your HR and mobility team, delivering efficiency, consistency, and a better employee experience. Explore Working with Corporate Relocation Companies for more insight.

8. What is the core-flex model?

In this model, all employees receive a set of core benefits considered essential to a successful move, such as household goods shipment, final move travel, or temporary housing. These are non-negotiable elements that ensure consistency and compliance across the program.

In addition to the core package, employees can select from a range of flexible options tailored to their individual needs. Examples include spouse/partner career assistance, childcare support, pet relocation, home sale bonuses, or extended temporary housing. This personalization enables employees to feel more in control of their relocation experience, which in turn increases satisfaction and acceptance rates.

For employers, the core-flex model offers the cost predictability of defined core benefits while also providing customization without the need to manage multiple exceptions. It’s especially popular with organizations that want to attract diverse talent, since employees at different life stages often value different types of support. Learn more in The Evolution of the Core-Flex Model.

9. How do RMCs support implementation and the client partnership?

Once selected, a relocation management company works closely with the client to ensure a smooth implementation and long-term partnership. This typically includes:

• Structured Onboarding and Implementation: RMCs guide the employer through an initial rollout process. This includes aligning policies, setting up technology platforms, training internal stakeholders, and ensuring suppliers are ready to support employees.
• Service Level Agreements (SLAs): They establish SLAs that define performance expectations, such as response times, service delivery, cost controls, and employee satisfaction benchmarks. These agreements create accountability and transparency.
• Key Performance Indicators (KPIs): RMCs measure program effectiveness through KPIs like relocation cycle time, budget adherence, and employee satisfaction. Regular reporting helps employers monitor results and identify opportunities for improvement.
• Account Management: A dedicated account manager or team acts as the client’s point of contact. They provide strategic guidance, resolve issues, and recommend policy adjustments as business needs evolve.
• Continuous Quality Assurance: RMCs use audits, reporting, and regular review meetings to ensure quality service delivery. They adapt quickly to new tax regulations, housing market conditions, or client-specific priorities.

RMCs don’t just manage moves – they act as ongoing strategic partners, helping employers refine policies, track performance, and improve the overall employee relocation experience over time. See Implementing Relocation Management Services. 

Want to build or benchmark your relocation policy with confidence?

Our comprehensive ebook—U.S. Domestic Relocation Policy Best Practices—provides best-practice benchmarks, real-world program designs, and strategies to optimize your approach.

Download the Relocation Policy Best Practices eBook