Letter I just got from my company regarding 401k

[TallBill]

So I've been a part time student intern for a government contractor for about 8 months now working from 15-25 hours a week. I set a real low % to be taken out for 401k because I won't be around the 5 years necessary to get 100% vested.

Anyways, I got a letter today saying that because I'm part time I don't get as much benefits as full time employees and they calculated that I should have received $450 in benefits for the time that I've put in, just in the 3rd quarter alone (4/6 - 7/12).

They are dumping $450 into my 401k as a result in a few days. Now the real question will be if it goes straight to my balance or the vested balance. I'll probably only be at 20% vested when I leave the company.

Update

Nice, account transaction today...

BENEFIT SUPPLEMENT $453.86

100% Vested

 

[thegimp03]

They probably match the whole amount and this would go into the "Account Balance". However, you might be able to find a "Vested Balance" as well, which shows how much you are vested.

 

[Dr. Detroit]

Read your Plan Document on vesting %'s or contact your 401K administrator.

 

[TallBill]

Originally posted by: thegimp03
They probably match the whole amount and this would go into the "Account Balance". However, you might be able to find a "Vested Balance" as well, which shows how much you are vested.

Right now my current balance is $385
Vested balance is $272

Total employee contributions is $430. Crossing my fingers that it shows up 100% vested.

 

[thegimp03]

It probably won't be fully vested. I'm guessing that it'll be 20% * $450 = $90 vested and the rest "deferred" which will vest gradually over 5 years - 40->60->80->100%

 

[TallBill]

Originally posted by: thegimp03
It probably won't be fully vested. I'm guessing that it'll be 20% * $450 = $90 vested and the rest "deferred" which will vest gradually over 5 years - 40->60->80->100%

That's what I'm expecting to. I'll find out on the 17th I guess.

 

[thegimp03]

On an unrelated topic, your 401k has only gone down 10%? ($430-$385)/$430


That's pretty good, mine is down 40%!

 

[TallBill]

Originally posted by: thegimp03
On an unrelated topic, your 401k has only gone down 10%? ($430-$385)/$430


That's pretty good, mine is down 40%!

No, its down from $430 to $272

 

[thegimp03]

That's more like it, hehe

 

[JDMnAR1]

It isn't really clear to me from your post if the account addition is your contribution or your employers. If the $450 that is being added to your acct is YOUR contribution that you elected (as opposed to employer match), then that should be 100% vested. IF, on the other hand, it is your employer's matching contribution, then I would feel comfortable saying it will not be fully vested from day on - probably anywhere from 0%-20%.

Edit: Or if that total is your contribution + employer match then it will be some other percentage.

 

[TallBill]

Originally posted by: JDMnAR1
It isn't really clear to me from your post if the account addition is your contribution or your employers. If the $450 that is being added to your acct is YOUR contribution that you elected (as opposed to employer match), then that should be 100% vested. IF, on the other hand, it is your employer's matching contribution, then I would feel comfortable saying it will not be fully vested from day on - probably anywhere from 0%-20%.

Edit: Or if that total is your contribution + employer match then it will be some other percentage.

It isn't my contribution or a matching contribution. It's an employers non-matching contribution of some sort The company doesn't say if it is vested or not, but it does say that they are doing it to give me $450 worth of benefits.

If they gave me $450 of benefits at 0% (wont even be 20% vested till april) then it kind of defeats the companies policy. If it turns out to be 100% vested, then it'll be a nice quarterly bonus for a part time job.

 

[JDMnAR1]

Originally posted by: TallBill

Originally posted by: JDMnAR1
It isn't really clear to me from your post if the account addition is your contribution or your employers. If the $450 that is being added to your acct is YOUR contribution that you elected (as opposed to employer match), then that should be 100% vested. IF, on the other hand, it is your employer's matching contribution, then I would feel comfortable saying it will not be fully vested from day on - probably anywhere from 0%-20%.

Edit: Or if that total is your contribution + employer match then it will be some other percentage.

It isn't my contribution or a matching contribution. It's an employers non-matching contribution of some sort The company doesn't say if it is vested or not, but it does say that they are doing it to give me $450 worth of benefits.

If they gave me $450 of benefits at 0% (wont even be 20% vested till april) then it kind of defeats the companies policy. If it turns out to be 100% vested, then it'll be a nice quarterly bonus for a part time job.

OK - so that is like the minimum employer contribution, and probably will be vested at the same percentage as any matching contribution. As an example, my employer contributes 5% of my salary to my retirement regardless of if I contribute or not. That sounds like what you are beign credited with in your account. The vesting rules generally apply the same to all employer contributions, be they matching or not.

 

[TallBill]

Originally posted by: JDMnAR1

OK - so that is like the minimum employer contribution, and probably will be vested at the same percentage as any matching contribution. As an example, my employer contributes 5% of my salary to my retirement regardless of if I contribute or not. That sounds like what you are beign credited with in your account. The vesting rules generally apply the same to all employer contributions, be they matching or not.

Yeah, seems like the same thing. But I can always hope right?

 

[TallBill]

Hmm, just talked to my district HR guy and he said that it'd count as an employee contribution which would be really sweet.

 

[Evadman]

Apparently I am crazy, because I am putting just over $1200 into my 401k monthly.

 

[TallBill]

Originally posted by: Evadman
Apparently I am crazy, because I am putting just over $1200 into my 401k monthly.

Why would that make you crazy? It's my part time $12/hr college job, what do you expect?

 

[Evadman]

At least put in the max amount they match, just in case you stay. Hell, even if they don't match. if you put in $10, it is really like you put in $7.90 assuming 21% tax bracket. Not only that, but the time value of money makes the $1 you put in now worth way more than the $1 you put in later.


For example, lets say you work 20 hours a week at $12. Your take home is in the $168 range per week. Lets also say you will leave the company at the end of next year, so you have 52 weeks of contributions.

At 5% ($8.40 per week) you would put $436.80 into your 401k. Your tax savings (would pay this much less tax this year) would be approximately $91.70. When you retire at 65, that $436.80 will be $31,853

At 10% ($16.80 per week) you would put $873.60 into your 401k. Your tax savings (would pay this much less tax this year) would be approximately $183.46 When you retire at 65, that $873.60 will be $63,706

So that additional 436.80 next year equates to an additional $31k on the other end. You telling me that you are going to miss that $8? Hell, it isn't even $8, it is $6.50 or something close when you count taxes.

 

[TallBill]

Originally posted by: Evadman
At least put in the max amount they match, just in case you stay. Hell, even if they don't match. if you put in $10, it is really like you put in $7.90 assuming 21% tax bracket. Not only that, but the time value of money makes the $1 you put in now worth way more than the $1 you put in later.


For example, lets say you work 20 hours a week at $12. Your take home is in the $168 range per week. Lets also say you will leave the company at the end of next year, so you have 52 weeks of contributions.

At 5% ($8.40 per week) you would put $436.80 into your 401k. Your tax savings (would pay this much less tax this year) would be approximately $91.70. When you retire at 65, that $436.80 will be $31,853

At 10% ($16.80 per week) you would put $873.60 into your 401k. Your tax savings (would pay this much less tax this year) would be approximately $183.46 When you retire at 65, that $873.60 will be $63,706

So that additional 436.80 next year equates to an additional $31k on the other end. You telling me that you are going to miss that $8? Hell, it isn't even $8, it is $6.50 or something close when you count taxes.

GREAT ADVICE, I DO! I'VE CONTRIBUTED $430 ALREADY IN 8 MONTHS.

 

[Farang]

hey champ what have i told you about getting excited?

 

[TallBill]

Originally posted by: Farang
hey champ what have i told you about getting excited?

There was no excitement. If you were watching billtv you would have noticed.

 

[TallBill]

Nice, account transaction today...

BENEFIT SUPPLEMENT $453.86

100% Vested

 

[TallBill]

Meh, one last flaunting bump.