Your company 401(k) program??

[Mike G]

My current employer matches 50%, up to 6% of my salary.

AND, they only make that contribution ONCE PER YEAR, If they feel like it.

I have been there three years now, and they have only made one contribution so far. Another was due the 1st of July, but I haven't gotten the annual statement to see if they did. Management won't say. I don't make the maximum contribution because my salary isn't very good, and I have the F.D. pension.

My wife works for one of the local hospitals, and her 401k is one of the best I have ever seen. Employer matches 100% of her contributions, up to 6%, then 50% up to the 12% maximum. She also has a pension, fully funded by the hospital. So, needless to say, she makes the maximum 401k contributions. Retirement should be good for her, and she only has 10 years to go until her 30 is in.

 

[pinetree]

My Co has one of the best, 1:1 match up to 6% with up to an additional 3% based on performance. Last year I got 1:1 up to 8%.

Bad part is our picks are limited to buckets of investments and 50% of the match is company stock.

 

[AWGunS]

Vesting only applies to money the company puts in. Your money is always yours. A 401K is a great thing to have. If the company gives any sort of contribution or matching funds, that's frosting on the cake. Don't forego the cake because you're afraid you might not get the frosting.

I am clear on that.

 

[Bob W]

50% of the match is company stock.

If only half of the match is company stock, that makes 25% maximum in company stock. That's not too bad; I think 15% is the max amount recommended to have in your company's stock. So if you had some sort of investment plan outside of your 401k, 15% would be easy to achieve.

Bad part is our picks are limited to buckets of investments

I think that's common in 401k retirement programs. The company is signed up with a single investment firm or a single mutual fund company, so the program participants have a limited selection of investment choices. And they always seem to be high-fee choices as well...

Still, the tax advantage more than outweighs the expense.

-Bob

 

[Gollnick]

If company contributions are in company stock, then two priciples apply:

First) A 401K is a great thing to have. If the company gives any sort of contribution or matching funds, that's frosting on the cake. Don't forego the cake because you're afraid you might not get the frosting.

Second) Don't invest too much in any one company's stock... including your own company.

So, let's say that your company matches 1:1 upto 5% and the match is in company stock.

Let's first imagine that you have no confidence in the company. Apply the first principle. Don't forego the cake because you're afraid you might not get the frosting. Invest at least 5% in the plan anyway. If the company tanks, you may loose the company matching money. But your money will still be yours.

Let's second imagine that you're gung-hoe on the company and want to invest 10% of your money in company stock. Don't forget that the company will be matching the first 5% and the match will be in company stock. Invest 10%, but put the first half of it in company stock which the company will match bringing you up to your desired 10% in company stock, and then put your other half in something else.




People sometimes hesitate to invest in a 401K because the investment options in their company's plan are lack-luster. They'll say, "I don't particpate in the 401K because the best option in it only made 6% last year. I do better in my mutual fund account where I made 12% last year." But, as Mr. Iron City pointed out, 401K money makes 28% or more instantly because you don't pay taxes on it. When you leave the company, you'll want to roll your money out of that lack-luster 401K plan, but, until then, it's really hard to beat the 401K's tax advantage.