A brief survey on your company's 401(k)

In My Humble Opinion
1

I am in the process of redesigning my company’s 401(k) plan. Our current employer match sucks, and I’m trying to get it upped, but some people here think it’s just dandy the way it is now. (We match 50% of only the first 3% of the employee’s contribution - i.e., if someone puts in $10,000 per year, the company contributes only $150.)

Could I ask those of you with a 401(k) plan to complete this brief survey so I will have some anecdotal evidence beyond my own previous job experience?

  1. What type of company do you work for and approximately how many employees are there? (You don’t have to actually name the co.)

  2. How much, if any, of your 401(k) contribution does your employer match?

  3. How long does it take for you to be 100% vested in your company’s 401(k) matching contributions?

  4. Does your company also have a profit-sharing plan? If yes, does the company put money into the PS plan and into the 401(k), or just one or the other?

  5. If you do have a PS plan, how much (percentage-wise) does the company put into the PS plan?

Thanks very much. Maybe the SDMB will be instrumental in providing for my retirement!

2

I work for a big software company. I think we have somewhere between 2000-3000 employees, but I could be very wrong.

Employer matches 50% up to a maximum match of $2500.

It’s immediately vested, ie, no vesting period.

No profit sharing. However, we’re a public company, and they have a very agressive employee stock purchase program. Basically, I can put up to 10% of my salary into buying our stock at a reduced price. I’m guaranteed to make at least 15% on it, and in reality it’s been around four or five hundred (yes, hundred) percent profit.

Does that answer your questions?

3

(1) consulting. 500 employees.
(2) 50% match of up to a 6% paycheck deduction (max allowed paycheck deduction is 15%) So, if your paycheck is $1000 and you’re putting 6% in a 401k ($60), then the company would add $30. If you’re doing 5%, then they do 50% on 5% ($25). If you do 7%-15%, they still only do 50% on 6% ($60). It sounds like your company’s match sucks.
(3) 5 years
(4) no

4
5

  1. Educational. Over 15,000 employees.

  2. My employer will match my contribution dollar for dollar, maximum 5% of yearly salary

  3. One year

  4. NA, we’re non-profit.

Hope this answers your questions.

6

Thanks to everyone so far.

Come on, people, I need better than a 25% view/respond ratio! Pretty please!

7

  1. State government

  2. Zero

  3. N/A

  4. No

  5. N/A

8
  1. Computer Consulting services; ~150 employees.
  2. 50% on contributions of up to 5% of one’s gross pay, no matching for contribution amounts greater than this.
  3. Sliding scale, but 100% vested after 5 years.
  4. Nope
9

  1. A newswire service. Approximately 400 employees.

  2. Employee contributions are matched at at least 10%; it is usually significantly higher and is based on profitability. I don’t think I’ve seen it at less than 50% since I’ve been here.

  3. Employees are 100% vested at five years.

  4. Yes, referred to as the “Savings Trust” element of the 401(k) plan. Funds are put into the employees’ 401(k) accounts.

  5. The amount varies depending on profitability. There is also an annual contribution of 3% of salary that replaced the company’s old pension plan.

10

  1. Old: large, international manufacturing co.: 2000-3000
    New: large, international tech consulting co.: ~3000

  2. Old: automatic 4.5%, without putting a penny in, then various percent matching as you put in up to 8%, adding to a total of 8.25% by the company (our max allowed was 15%), beginning on first day
    New: 40% match on up to 6% of salary (ie: max of 2.4%). starts the first day of the first full quarter after your first year.

  3. Old: 4 years
    New: 5 years

  4. Old: no
    New: yes, but not until after a year and a quarter so I’ve no idea what they’ll do

  5. Old: N/A
    New: see above

Yes, I took a huge cut in retirement beni’s coming here. Yes, it bothers me.

11

  1. Outsourced e-commerce service provider. Approximately 400 employees.

  2. Employer matches 50% of total employee contribution, with no limit except as imposed by law. (That is, the employee is limited to 15%, and $10000 annually if I recall correctly.)

  3. The employer contribution vests in 2 years.

  4. We’ve got a stock purchase plan, allowing us to deduct up to 10% from our after-tax pay and purchase stock at a reduced price. The price is 15% less than the lower of June 30th or Dec 31st, and then the accumulated contribution is used to buy at the price.

  5. No employer match or contribution to the stock purchase plan.

12

We have about 50 employees, our company matches up to 2% of your gross not your contribution. (i.e., if you gross 1000.00 the company (max) match is 20.00. so at 26000 per year the co match is 520.00). I’ve never heard of the kind of match you described, it most defintely sucks.
We are vested at 3 years. We have profit sharing but only for managment and officers

13

thinksnow, I know what you mean. I stupidly didn’t figure out when I took this job just how much I was losing in bennies - I should have at least asked for a much higher salary.

At my old company (mgmt. consulting, 10,000 EEs worldwide), we had both a profit-sharing plan (into which the company deposited 12% of gross pay) and a 401(k), which the company didn’t match at all. We were 100% vested in the PS plan from hour 1 of employment. So even though the co. didn’t match the 401(k), as long as you were employed by Dec. 1, they would put 12% into the PS plan and if you left Dec. 2, you could take it all with you. Naturally, people tried to time their quitting until Dec. 2.

I have lost thousands - just in real-time money, forget about the compounded income at retirement - by taking my current job. Sigh …

14

My only consolation is that I was able to move out of the town I was in by quiting. I also made the transition form manufacturing to tech, so I guess I’m hoping that pays off more than the loss of beni’s, ya know?

I knew about it coming in, I just hoped it would be okay transfering my olf 401k to a conduit IRA then Roth and continuing to fund IRA’s and the like until I can get into the (meager) 401k plan here.

[financial security plug]
BTW, anyone not funding 401k or IRA, no matter how meager or how small an amout you invest, you are doing yourself a great diservice. In case you’ve never heard the figures, it goes like this:
If you invest something like 100 a month from the age of 20 to 30, then never again and compare that to investing from 30 to 65, you would have something like $200,000 more from the early investment! Gotta love compound interest. Small amounts add up more than you can ever imagine. The earlier you start, the more time your money has to grow.
[/financial security plug]

15

Glad to be of help missbunny

**

Computer/Electronics store. About 750-900.

**

1/4 of the first 4%.

**

As soon as I was eligible to begin contributing, a year after I started.

**

No profit sharing plan.

Good luck,

Zev Steinhardt

16

I’m not yet qualified where I work now, so I’ll base this on the last job I had.

Finance company, privately held had about 2,000 employees nationwide

Employer match- 100% up to 3% of your income. If you contributed more than that, they would still match up to that 3%.

vested a percentage based on seniority- after 4 years, in the plan, you were fully vested.
no profit sharing occurred. I miss that job sometimes… dang. I had 4 weeks of vacation each year, good bonuses…

The plan was a merrill lynch one- dunno if that helps you any.

17

Well my current company isn’t going to help you in your survey much, because it is a start-up and stock options are most of the benefits, but I used to work for USwest so for them the deal was.
1.Telecom, 80,000 multistate.

  1. 83% of first 6% of salary contributed, up 15000 total.

  2. 3 years.

  3. no*

  4. na

*but they did have a true old fashioned pension plan. I believe the total was 1.25%( of highest salary average for 60 month period) * years worked up to 30.

18

zev, is that 1/4 of the first 4% of your contribution or of your income? I hope it’s your income; I didn’t think I would find anyone with a match even close to as bad as my company’s.

19
  1. What type of company do you work for and approximately how many employees are there? (You don’t have to actually name the co.)

Law firm

  1. How much, if any, of your 401(k) contribution does your employer match?

Zero, nothing, zilch (sore subject)

  1. How long does it take for you to be 100% vested in your company’s 401(k) matching contributions?

N/A (see 2. above)

  1. Does your company also have a profit-sharing plan? If yes, does the company put money into the PS plan and into the 401(k), or just one or the other?

Nope

  1. If you do have a PS plan, how much (percentage-wise) does the company put into the PS plan?

N/A
Since this is my first post on any of the SDMB boards after much lurking, I feel obligated to bring a small gift, say flowers, in order to show my generous nature and gratitude for such interesting conversations. So here it goes…

Depending upon the size and composition of your current employer, you may experience a number hurdles when instituting a change in your employee benefits.

First, look at your current plan document(s). Who has the authority to amend/terminate the plan? Probably a committee or the employer itself. If the employer is sufficiently sophisticated, the Board of Directors will have a compensation committee made up of outside directors (the reason for this is not relevant under this situation, has to do with setting performance goals for the big cheeses so that they can get even more cheddar). These outside directors can be somewhat skittish about instituting plan changes without some kind of study or report because: (1) the outside directors are executives used to getting reports and (2) this is probably not their area of expertise. Enter the SDMB survey, definitely scientific. All kidding aside, a survey book might cost $100s from the Mercer, Hewitt, Watson Wyatts of the world or you could taunt your current accountant/actuary with a request for common 401(k) practices (with an implication that more “consulting” business could be theirs if they provide such information). Management seems to like to know what its competitors are doing regarding benefit features, so surveys will list information by company size, industry, etc. and how many offer a match, size, vesting, etc. Side note: All reports must be formatted and printed in landscape fashion. Don’t ask why, just accept this.

Second, the Internal Revenue Code requires certain plans, such as 401(k) retirement plans, to pass discrimination tests based upon participant demographics. Two main tests exist (actually three, but lets focus on the 401(k)/401(m) tests) that compare the amounts deferred by highly compensated employees to the amounts deferred by non-highly compensated employees. Likewise, a similar test is conducted regarding contributions (including employer matching). Why does this matter? Well, if a plan fails testing, the plan must take certain steps to rectify this, generally refunding highly compensated employee amounts until testing is passed or increasing contributions on behalf of non-highly compensated employees to bring the ratios into line. Management does not like either result, trust me. Also, when a plan fails testing, this usually generates more work for the accountant/actuary and therefore, more fees or expenses, depending on which side you are on. The independant accountant will run these tests, but instituting a robust match that causes a plan to fail its testing can become an annual landmine.

Third, many other features exist in addition to those you have asked about. Be creative, ask questions of your service providers and don’t settle for some crap answer like, “The [Internal Revenue] Code requires [blank].” That is the most common bluff, I encourage everyone to call that kind of bluff.

If you couldn’t tell, I practice law in this area. ERISA rocks.

20

Nope. It’s 1/4 of the first 4% of my contribution.

If I contribute 1% of my salary, 1.25% gets put into my account.

2% contribution gets me 2.5%

3% gets me 3.75%

4% gets me 5%

5% gets me 6% (and so on).

Zev Steinhardt