I have recently become eligible for my employer's 401k plan. For reasons that I will not discuss here, I do not intend to stay at my current employer for longer than another year or so at most, perhaps even shorter. Is the 401k still worth taking advantage of? In case it makes a difference, I am currently 26 years of age.

  • You say today that you don't plan to stay there longer than a year. Imagine that your plans change or that you keep postponing the decision and you are 5 years down the road at the same company without having started your 401k.
    – Eric
    Mar 4, 2015 at 21:45
  • 3
    Two questions: 1) Do they have an employer match; and 2) What is the vesting period?
    – JohnFx
    Mar 5, 2015 at 0:02
  • @JohnFx: 1) No. They have a safe harbor matching of 3% of your salary every year, and profit sharing. 2) For employee contributions and safe harbor contributions, nothing. For profit sharing (which has been next to $0 the last few years anyways according to colleagues), 5 years.
    – wolfPack88
    Mar 5, 2015 at 0:29

3 Answers 3


If you can afford it, Yes. You will be able to roll it over (however much it has in it) to your next 401K, or to your own self-directed IRA. Anything you can afford to save now will begin to compound, and with compounding (and being in your mid-twenties), time is everything.

  • 1
    This is almost certainly true but it might be worth double checking on what fees they charge to take your money out and comparing it to the taxes you save.
    – rhaskett
    Mar 4, 2015 at 19:44
  • Good point. Most 401K plans do not charge fees to roll over your balance to another plan, or to an IRA. At OP's age, it's not so much a matter of saving on taxes as it is about getting the retirement savings started as early as possible. A Roth-401k option would be ideal if you have it available.
    – Kent A.
    Mar 4, 2015 at 19:49
  • I do have the Roth 401k option, which is what I was thinking of. However, the plan document said that not all of the money may be eligible for rollover, and that the rest would be taxed at 20%.
    – wolfPack88
    Mar 4, 2015 at 20:05
  • You could leave the money in the 401K until it is fully vested, and then roll it over. But you would have to keep track of it yourself. The 401K plan may not allow small balances, though, which would force you to withdraw the money when you leave the company. The company match usually doesn't go into the Roth bucket, so it would be taxable if you withdraw it. If that's the case, then @JoeTaxpayer's advice to go directly to your own IRA/Roth may be better if you're not planning to put more than $5500 in this year.
    – Kent A.
    Mar 4, 2015 at 20:08
  • 1
    @KentAnderson I have never seen a fund that allowed vesting to be earned after you left the company. They may allow you to keep the account, but they will pull the non-vested portion soon after the last day with the company. Mar 5, 2015 at 11:25

Do they offer a match with a sub-one-year vesting (or a reasonable % in the first year)? If not, and if the current IRA limit ($5500 in 2015) covers you, you might be better off just going the IRA route.

  • They do not, but I was planning on saving more than $5500 if I were to go for it.
    – wolfPack88
    Mar 4, 2015 at 20:03

I'll take a slightly different approach, no questions, however, I'm not a financial guru.

I would always say yes, no matter the length of time you intend to be there.

1) Things change

2) Retirement is part of my game plan, whether I work after retirement is irrelevant to me now (it's something I'll be able to decide), I want to be financially able to retire at a reasonable age.

3) Save now, enjoy later, Generally speaking, the few dollars you put away now is worth a lot more 30 years later.

Retirement saving is more of a mind-set for me.

At your age I'd had a "retirement plan" for 3+ years, I look at it once a year to make sure everything is doing alright, then I forget about it, you never know when you might need a decent chunk of change (even if you're penalized, some situations warrant it), it adds up quick. In my experience, you can almost always deal without the extra cash now. When making a financial decision, I always try to consider the five Ps, "proper planning prevents poor performance".

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