I just accepted a new job offer and was reviewing the benefits package. Early in my career before my recent under-employment stint I was always pretty indifferent to 401Ks and retirement planning in general. In retrospect this was dumb, but I was thoroughly convinced that I was going to strike it rich on my own. Ahh, the naivete of youth. Anyways, I’m not sure what the typical 401K agreement is in the working world these days and I was hoping to take a poll and benchmark my company’s policy with the Dope at large.
So, pick your companies matching portion of overall salary is in the poll. For any fractional percentage points please round down (truncate). IOW, a 2.5% match becomes a 2% match. Also, I ask that you folks also share in the thread additional relevant details. How long before that employer contribution vests? What’s the cap? Any other restrictions, benefits or details that might be relevant, whether it’s common or uncommon in the market. I’m still pretty unfamiliar with this stuff so if this poll is missing something glaring please point it out.
I’m in M&A so I get to see a lot of different HR policies (within the right industries anyway), and I see a lot where you can contribute up to 6%, and they match 1/2 with vesting over 3-5 years. This is what my company does as well. However, the best one I have ever seen: you can contribute up to 6%, they match 100%, and it all vests immediately. Thermo Fisher (TMO)
Keep in mind that not all plans calculate that way. Where I worked before, it was $0.25 on the dollar, up to a certain %.
I work for a university, so we have a 403(b). Works essentially the same way, but nonprofits have a different regulation #. We can contribute to the federal maximums. In fact, contributing 3% of salary is mandatory. Employer matches contributions up to 5% of salary 1-to-1. Anything over that is not matched. There is no vesting period, and we can choose between three different plan administrators – CIAA-CREF, Fidelity, Vanguard, and can choose whatever funds those companies have available.
This is an extremely liberal policy, many are much, much, much more restrictive – not only limiting you to one plan administrator, but to a certain handful of funds.
My company matches dollar-for-dollar for the first 3%. The 2% after that they match .50 cents on the dollar. Maximum matching is 5%. So for every $10 I put in, they match with $9.
Ours gives you an initial 50 cents on the dollar for up to 6% of your salary. Then at the end of the year depending on how the company fared will give an additional 1-50 cents on those dollars in a lump sum.
Well, there are two different things here: Up to what percentage of your salary does the employer match on - and what percentage of that do they give you.
I’m guessing your intention was to get, basically, the product of the two. For example the employer matches half of what you put away, up to you putting away 6% of your salary, you actually get 3%.
So the plan would be written “employer matches 50% of your contributions up to 6% of your salary” or something like that. If you save more, like 20% of your salary, you don’t get any more than that 3%
Is that what you meant?
Mine at present is quite generous (newer hires to the company would get far less). They used to put an automatic 5% aside separate from the 401(k) (a defined contribution retirement plan) - in a separate account which we don’t control, then about 4 years ago they changed it to an automatic 2%, plus 1-for-1 matching up to 6% of our income. So the net effect is the same (8%), but ONLY if we put at least 6% into the plan. Newer employees have a smaller automatic contribution and smaller matching, so the most they’d get is 6%.
Anyway - the general advice is put enough to get the employer’s full match, whatever it is. If you leave before you’re vested, oh well - you still have access to your own contributions. And if you stay long enough - hey, “free” money! :).
Ours is a profit-sharing plan, not like most 401(k)s. So my employer matches dollar for dollar up to only $1200 annually (not a percentage of salary), but then contributes another percentage of salary on top of that, generally 3%.
100% matching of up to 6%. Full vesting after five years of employment with the company.
They did 100% of up to 3% and 50% of the next 3% until early this year, when they terminated contributions to the cash value pension plan, and ‘replaced’ that with the additional 401k matching.
My employer stopped 401k matching this year. It was decent and you only had to be with the company three years to keep the employers match when you quit. I’ve worked at a couple of places where you have to stay a lot longer to keep the company match
I assume this means that they will match 4.5% of your salary, but in order to get that 4.5% you need to contribute 6%. If you contribute just 5% they’ll match 3.75%, correct? If you contribute 8% they still only match 4.5%, right?
I’m not sure if you were directing the question at me or not, but I’ll reply anyways. My new company does 100% matching up to 2% of your salary. It vests after 6 years. This seemed awfully low to me.
Based on the poll results I’m curious which option people are selecting. If you get 50% of up to 6% I’d expect them to select 3% in the poll, but considering the early returns either people have some pretty generous plans or they are selecting the 6% even if the employer match isn’t 100% based on your examples.
If the general advice is to contribute only up to the employer match, why is that the case? I understand the you want to get everything you can. but 2% with a match is only saving 4% a year. Your most common example of 50% of up to 6% would be a 9% savings per year. I don’t know what the general opinion of what a reasonable retirement savings plan is considered to be, but in my case 4% seems awfully low. Is there a reason why it would be unwise for me to contribute say 7% with a match of only 2% to account for a 9% savings? Would that money be better invested otherwise? Is there a disadvantage to contributing above the employer match?
Mine will match 100% of employee contributions up to 3%. You have to be employed a year to be fully vested I think. And you also have to be 21 to participate. Anyone else have a minimum age to participate or is that just my employer?
4% match based on a 4% investment of my own, vested after 6 years. But my company gives us an additional 18% in profit sharing and stock options for a total of 22% for my 4% investment. My company is atypical.
The only examples I’ve seen of advice saying to contribute only up the the employer match is usually followed by a statement to put additional savings into another retirement vehicle (IRA, ROTH, etc.) depending on your financial situation. But I rarely see advice to contribute only up to the match. Most of what I’ve seen says that you should in no way contribute less than the match.
My company contributes 50% of up to 6%. Vesting is 20% per year up to 5 years. My last firm had the same schedule.
Also, both of them give additional variable contributions at the end of the year. At my new company, the variable contribution (it depends on how the company does) has averaged about 5% and has been pretty steady (between 4% and 6%). Those contributions vest immediately. My old company also averaged 5%, but was much more varied (from 2% to 8%) and it vested at the 20% per year rate.
