I do not want to contribute to my 401k, however, my contracting company does offer a match of 5%. Can I use the declining of this 401k to negotiate a 5% higher (or a bit lower) salary? Is the company actually forking the bill for the match, or is it an incentive offered by the government?

I'm young and don't know how 401ks work, but am very involved in my investments. I don't like the aspect of how a 401k limits my access to both my money and my investment opportunities, plus the additional separate portfolio management. Please do not tell me I need to save, because I am, but not through my 401k.

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    Probably no harm in asking, but I wouldn't count on it. But perhaps you should investigate how 401(k)s work before leaving free money on the table
    – Kevin
    Commented Jan 25, 2019 at 20:37
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    @TrevorKS Really - you can beat a 100% return on your own?
    – D Stanley
    Commented Jan 25, 2019 at 20:46
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    The money doesn't have to stay there until you're near-dead. As soon as you leave the employer, you can roll the money into an IRA, and invest it in whatever you want.
    – stannius
    Commented Jan 25, 2019 at 20:47
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    You should seriously learn about 401 plans. Even if yours doesn't offer great investment options there is a reason common wisdom is to max out your contribution or at the very least make sure you get your employer match.
    – topshot
    Commented Jan 25, 2019 at 21:08
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    They will not allow you to do this. You may say you don't want the 401k now, but what is to stop you from changing your mind? You can change your 401k contribution at any time. Do you really expect them to write some special binding contract just for you to stipulate that they will decrease your salary if you ever decide to enroll in 401k? Oh, and if they offer 401k, they can't prevent you from participating, as that would be against Federal Regulations.
    – Glen Yates
    Commented Jan 25, 2019 at 23:05

2 Answers 2


The company is paying the match - it is not subsidized by the government. However, there may be other differences that don't make it a 1:1 swap with cash:

  • 401(k) contributions and matches are tax-deferred, so switching to salary would increase tax costs for them.
  • 401(k) matches are often vested on a schedule, meaning you might only be entitled to 25% after each year you are employed with them. So a swap to salary would cost them more unless you stayed employed with them until you're fully vested.
  • There are IRS regulations that require a certain number of employees to participate in the 401(k) to ensure that the benefit is not geared too heavily towards "highly-compensated employees". If cash were an option, it's reasonable that more non-highly-compensated employees would take that option, tipping the scales in the wrong direction.

So yes, you can ask, but I would not hold my breath. I would instead be thankful for the "free" retirement funds and work harder to become more valuable so that you earn a higher salary (and more retirement benefits) in the future.

I feel I can invest my money personally, and grow my savings higher than if I had left it in a 401(k), even considering the match.

Keep in mind that a 401(k) match is essentially a 100% return on your retirement savings. If you contribute $100, your 401(k) will instantly have $200 (once fully vested as mentioned above). I don't know what you're investing in that can beat that.

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    If what Stannius mentions is true, it would be a much more convincing idea for me then to contribute. I guess i'm being young and stubborn, i don't like the idea of not having direct access to my investments, even if there is a intensive.
    – TrevorKS
    Commented Jan 25, 2019 at 20:59
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    @TrevorKS What stannius mentions is true and quite common.
    – D Stanley
    Commented Jan 25, 2019 at 21:09
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    @trevorks you still have access to the funds, there's just a tax penalty if you withdraw them early.
    – Kat
    Commented Jan 25, 2019 at 23:36
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    Twenty-five years ago, there were a lot of shady 401(k) with high fees and a small menu of dubious investments. I remember one that even had a tax-free bond option, which makes no sense for a non-taxable account. These clowns mostly got squeezed out of the market by Schwab and Fidelity and other big brokers. My 401(k) includes an option where I can buy individual stocks. How much more choice could I want? Commented Jan 26, 2019 at 1:07
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    @BenVoigt I'm referring to the employer portion of Medicare and SSI, not income tax.
    – D Stanley
    Commented Jan 26, 2019 at 3:24

It is possible that some employer will allow this. But don't count on it.

One small company I worked for made it clear if you skip participation in the 401K, that increases the companies profits. They budget for the match, and an employee not taking it means they cost them less money to keep.

I have seen companies give extra vacation days if you skip getting the health insurance benefit. But these two things differ in a number of ways. In the US your options for signing up for insurance are limited to open season and life events, so they know you can't easily change your mind. The 401K can be joined at any time, you can adjust your participation every paycheck. Employees that don't need to get insurance from the company have insurance through a spouse or through their military retirement. They aren't generally hurting themselves financially by skipping participation.

The flexibility to join the 401K would severely limit the number of companies that would be willing to give you a bonus for not participating. I know of one place where not participating would cost you money. The company had a match bonus based on company profits. If you didn't participate then that 1-3% of additional match would not end up in the 401K.

Another reason they might not want to reward lack of 401K participation, is that the US government frowns on 401K plans that are biased towards only having highly compensated employees participate. If you assume that younger means lower pay, then the bumped up bonus for not participating may entice employees at the lower end of the pay scale to not participate. When the 401K participation is tilted too heavily towards the higher end of the pay scale, the government then limits how much the highly compensated employees can contribute. Companies want to avoid this.

Putting money into a 401K or IRA when you are young is intimidating. Losing access for decades seems to be a daunting rule. Of course the realization later on that you need to be saving for retirement doesn't allow you to go back in time and put that money into a 401K/IRA.

When people stayed in the same company for decades the idea of putting all your retirement into 401K was both normal and unusual. For the people who were counting on a pension, it was normal to count on one source of retirement funds. For those that expected either a small or no pension the idea of putting money away for decades was daunting.

Now people change companies many times. So they have multiple opportunities to either roll over money from 401K-to-401K or from a 401K into an IRA.

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