Am I getting screwed by my company via 401(k)

[DrPizza]

Originally posted by: Capt Caveman
Be lucky, a lot of companies don't even offer a match. You should list that as an option.

For what it's worth, (and you're not going to like to hear this), that's a really smart policy that your company has. 1, as Capt Caveman mentioned, you're lucky to get anything; a lot of companies don't match, or match only a very little. (My wife's employer matches from 25% to 40% of the first 2% - very minimal matching.)

However, why should they match on an employee who's going to walk out the door within just a couple years - no company loyalty? They end up losing money in this case, because then they have to go through the whole hiring process and training process.

 

[maddogchen]

my company doesn't do any matching unless you work there for a year. after that if you put in 4% they match that 4 and give you an extra 5% for a total of 9%. Kinda odd, so if you put in 4% you get 13% total.

At my previous job I didn't have any 401k. So I had to create and put in money into my own IRA. They gave me stock options which became useless when it went belly up. Startups suck

 

[spidey07]

Originally posted by: DaveSimmons
"Vesting" of matching funds over 4-5 years is normal for most companies, same with stock and stock option grants.

Exactly true. It's also an incentive for you to stay and grow your knowledge.

Very normal. Commonplace really.

 

[ghostman]

I selected the 4 years or more in the poll, but I am vested 20% each year. I'll be fully vested in 5 years. Though I'd prefer to be fully vested sooner, I think it's fair.

 

[slsmnaz]

Nice poll options :roll: As you can see it's a common practice, not something done secretly to screw you.

 

[Cattlegod]

Originally posted by: Capt Caveman
Be lucky, a lot of companies don't even offer a match. You should list that as an option.

 

[TipsyMcStagger]

It should be clearly stated the plan documents they are required to give you when you become eligible for the 401k.

 

[AlienCraft]

Originally posted by: msparish
Vesting policy at my company:
20% after 2 years.
40% after 3 years.
60% after 4 years.
100% after 5 years.

Same here, and I'm glad to have it.

 

[theeedude]

Vested right away. I didn't even know they could do it. What about returns on your investment? Is the money invested while it's vesting?

 

[GRIFFIN1]

My first engineering job was a sweat shop. The pay was low and the hours were long. Bonuses were put into the 401K plan because the bosses knew that no one would stay the 4 years it took to get vested. I'm pretty sure the bosses that had been in the 401k plan long enough to be vested got the money people lost when they left.

 

[Special K]

Mine is 100% vested from the day you start.

 

[Dimkaumd]

UPDATE:


Just had a meeting with my boss and he clarified for me

I will be vested in my emplyer match after 6 yrs.

the vesting schedule is as follows:

1 yr of service = 0%
2 yr of service = 20%
3 yr of service = 40%
4 yr of service = 60%
5 yr of service = 80%
6 yr of service = 100%


Again, would've been nice to find out right away.

I will lower my 401K contributions from 6% to 4%, and put the difference into a Roth IRA!

 

[krunchykrome]

"vested"

google it

 

[Homerboy]

Originally posted by: Dimkaumd
UPDATE:


Just had a meeting with my boss and he clarified for me

I will be vested in my emplyer match after 6 yrs.

the vesting schedule is as follows:

1 yr of service = 0%
2 yr of service = 20%
3 yr of service = 40%
4 yr of service = 60%
5 yr of service = 80%
6 yr of service = 100%


Again, would've been nice to find out right away.

I will lower my 401K contributions from 6% to 4%, and put the difference into a Roth IRA!

I'm sure it was relayed to you. I'd say it was illegal for them NOT to inform you. I'm willing to bet you got the invest package in the mail/from HR and filed it without reading it. Vesting is ENTIRELY common in most work places. It is rare the other way around.

If you have any plans to stay at your current employer for any amount of time (sadly nobody does anymore) then you should keep your money in the matched 401k

 

[DeadByDawn]

Why would you lower your 401k contribution to 4% ? That's like saying no thanks to free money.

 

[jiggahertz]

Immediately vested on 401k contributions at the 2 post graduate jobs I've had at 4/5% match respectively. I was vested for a pension after 5 years at both.

 

[Turin39789]

Hijack question - If I know I will be leaving my company before the vesting period is over, should I just focus on an IRA and forget the 401k. Assuming I can't save enough to do both.

 

[2Dead]

My company matches 100% up to only 4% though. I'm vested 25% each year. I just passed the 3year mark last month.

 

[Drakkon]

I started at UNLV and their policy was 100% vested from day 1 BUT 10.5% of pay MUST go directly to a 401k which is matched by 10.5% put into a 401a. The other fun stipulation is that no social security is taken out of my paycheck which i had to sign a form stating i understood this and what it meant (that if i do end up going on social security the money from these accounts will count and thus SS funding will be reduced).
Hoorah for state govt job!

 

[crystal]

Originally posted by: Dimkaumd
UPDATE:


Just had a meeting with my boss and he clarified for me

I will be vested in my emplyer match after 6 yrs.

the vesting schedule is as follows:

1 yr of service = 0%
2 yr of service = 20%
3 yr of service = 40%
4 yr of service = 60%
5 yr of service = 80%
6 yr of service = 100%


Again, would've been nice to find out right away.

I will lower my 401K contributions from 6% to 4%, and put the difference into a Roth IRA!

So you are saying that your Roth IRA will get at least a 20% return per year? The interest gains might be off but the vested percent you listed there - that is a guarantee gain for your 401K.

 

[CPA]

My company has 100% vesting immediately. Another reason why large corporations rock over small mom and pop shops.

 

[Xavier434]

I have a pension which is basically a 401K but not a 401K. I need to be here for 6 years which doesn't bother me because I am not leaving. Personally, I prefer IRA plans over 401K because they are more versatile.

 

[dullard]

Originally posted by: Dimkaumd
1 yr of service = 0%
2 yr of service = 20%
3 yr of service = 40%
4 yr of service = 60%
5 yr of service = 80%
6 yr of service = 100%

I will lower my 401K contributions from 6% to 4%, and put the difference into a Roth IRA!

If you think you'll be there long enough to reach the 2 yr point, the 401K (up to the 6% match) will almost always be the better deal than the Roth IRA. Sure, a 401K will likely be more limited in investment options and will likely carry higher fees. But, if you can even get the 20% vestment level, that'll be far better than the slight extra flexibility in the Roth.

If you definately won't ever reach the 2 yr point, you probably are better off skipping the 401K and going right into a Roth.

In your case, it is all or none. I just can't think of a point where you want both, unless you decide to invest a lot more money and you will exceed the 401K matching limit. Thus, your 4% suggestion just doesn't make financial sense.

 

[RaiderJ]

I'm matched up to 5% of my paycheck, and 100% vested from the start. Safe to say, I put in 5% of every paycheck! Free money is good!

 

[aldamon]

Originally posted by: TheNinja
My company matches 100% up to 6% and I'm fully vested right away.

Same here. Our health insurance sucks, but this is a great benefit.