71 votes
Accepted

Company with high match for 401K vs IRA, which to choose?

Max out the 401k. The uncapped match is a free 50% rate of return and no other investment can match this.
Hilmar's user avatar
  • 7,697
60 votes

401(k) investment after being fired. Do I own it?

Yes. Any contributions you make to your own 401(k) are yours - irrespective of when the contributions were made. Contributions made to your 401(k) by your employer might be subject to a vesting ...
brhans's user avatar
  • 1,608
54 votes
Accepted

What is the logic behind a 50% of X% 401(k) contribution match?

Many employees don't contribute enough to maximize the match, so the cost to the employer is not the same. Under the 50% of 6% strategy an employee contributing 5% would get a 2.5% match not a 3% and ...
quid's user avatar
  • 49k
51 votes

What is the logic behind a 50% of X% 401(k) contribution match?

This creates incentive for the employee to contribute more and increases the funds under management of the 401(k) plan. The size of the plan influences the fees that are charged in each of the funds ...
NL - Apologize to Monica's user avatar
37 votes
Accepted

Employer tax benefits of 401k matching vs salary increase

Salaries are subject to a 7.65% payroll tax; 401k matches are not.
chepner's user avatar
  • 4,466
30 votes

What is the logic behind a 50% of X% 401(k) contribution match?

Another factor to consider is that it encourages employees to contribute more into to the plan so that they'll be able to comfortably retire. Getting the full match encourages people to put at least ...
Dan Is Fiddling By Firelight's user avatar
26 votes
Accepted

401k match for extremely high income earners

Regardless of how much you make, the maximum amount of your compensation that can be used for the matching calculation is $270K. Furthermore, the sum of your individual contributions plus the employer ...
TTT's user avatar
  • 47.2k
22 votes

Company with high match for 401K vs IRA, which to choose?

It's very tempting to max out the 401(k), for the reason Hilmar mentioned. Remember, though, that there's more in life to save for than emergencies. For example: House down payment Vehicle ...
RonJohn's user avatar
  • 50.7k
19 votes

401(k) investment after being fired. Do I own it?

As others have noted, you are always immediately vested in your own contributions. For employer contributions, it is not legal to be totally unvested after 4 years of full-time service. If they have ...
jjanes's user avatar
  • 1,141
18 votes

If an employer matches 401k contributions, does each match have its own vesting schedule?

In the early days of 401Ks (think 1980's) the vesting schedules were not as regulated - so it is possible that some company had that complex a vesting schedule. The purpose of a vesting schedule is to ...
mhoran_psprep's user avatar
18 votes
Accepted

How to balance paying off student loans with 401k contributions when employer matches 100%, up to federal maximum?

Nothing beats a 100% gain, so you should strive to max out the 19500 limit every year. Only further money should go against open loans (within the options you have). Saving 4% or even 6% interest on ...
Aganju's user avatar
  • 37.7k
17 votes

Employer offering Roth 401k as well as traditional 401(k), established in career

The Roth/Traditional decision is complex, but can be broken down into a set of simple rules. Ideally, you want to choose to tax your money at the lowest possible rate. This specifically refers to ...
JTP - Apologise to Monica's user avatar
17 votes
Accepted

I'm attempting to understand my 401k and how much I need to contribute to maximize the match

The key clause is this: 1% of eligible compensation each pay period. If you are hired mid-year, you would be eligible for 1% of the remaining paychecks. If you contributed $19,000 from the first ...
Pete B.'s user avatar
  • 76.3k
14 votes
Accepted

Can I use my declining to put money into a 401k (for which they would match up to 5% if I did) to negotiate a higher salary?

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-...
D Stanley's user avatar
  • 133k
14 votes

401(k) investment after being fired. Do I own it?

Just because you are fired/quit/retire you don't lose access to logging into the 401(k) website. As has been said already you own 100% of your contributions, but you own someplace between 0 and 100% ...
mhoran_psprep's user avatar
12 votes

Employer tax benefits of 401k matching vs salary increase

They can offer it as a benefit, but not everybody will take advantage. If you make 50,000 and the maximum match is 5%; then they have to budget 2,500 for the match. Some people won't participate. Some ...
mhoran_psprep's user avatar
11 votes

Company with high match for 401K vs IRA, which to choose?

There is at least a tiny bit of consideration for diversity of retirement savings: tax deferred 401k with already-taxed Roth. But as has been said here, an instant 50% return on funds is virtually ...
R. Hamilton's user avatar
  • 3,226
10 votes

If an employer matches 401k contributions, does each match have its own vesting schedule?

I've never heard of a vesting schedule which you describe. Your co-worker is right: it (technically, a graded schedule) starts from date of employment (which includes situations where you're eligible ...
RonJohn's user avatar
  • 50.7k
9 votes
Accepted

Taking full advantage of 401k match when you don't want it

The only thing you are missing is that you can borrow up to 50% from a 401k's net value at very low interest rates, where you cannot borrow from a traditional IRA. Therefore, after contributing to ...
CQM's user avatar
  • 20.2k
8 votes

Employer offering Roth 401k as well as traditional 401(k), established in career

In addition to JoeTaxpayer's thorough answer, I just want to tackle one particular question that was also asked: ...all employer contributions are pretax? There are a few main reasons that ...
TTT's user avatar
  • 47.2k
8 votes

I'm attempting to understand my 401k and how much I need to contribute to maximize the match

There are generally two key percentages in a match program: the match ratio, and the match cap. The match ratio is how much money the employer will contribute for each dollar that you contribute. The ...
Acccumulation's user avatar
7 votes

401k match for extremely high income earners

Many companies will cap the max they will go up to. They may say something like "we'll match 5% upto 1,180$ per quarter." So for this class of benefits, this is a non-issue. For unlimited caps and ...
Lan's user avatar
  • 2,680
7 votes

Employer reneging on 401k matching

Employer contributions to a 401K are not mandated by law so they are well within their right to not contribute. There is likely language in your benefits handbook that indicates employer ...
Pete B.'s user avatar
  • 76.3k
7 votes

What happens to the company match for a 401k over-contribution?

The first employer matching contribution gets taken back. You don't want to mess around with over contributions like this. In addition to withdrawing over contributions, they withdraw some portion ...
minou's user avatar
  • 7,516
7 votes
Accepted

If an employer matches 401k contributions, does each match have its own vesting schedule?

Any 401k plan that I've been in, the vesting schedule goes by the date you started work at that company. Like my last job said you were 20% vested after 1 year, 40% at 2 years, 60% at 3, 80% at 4, and ...
Jay's user avatar
  • 22.6k
7 votes
Accepted

401k Match percentage - Does it include bonuses?

Every company I've worked for has matched contributions from all income regardless of source (salary, bonus, commission, etc.). Since you're choosing the plan and parameters, it's up to you, but I ...
D Stanley's user avatar
  • 133k
7 votes
Accepted

Why is my former employer matching dividends in my 401k?

Is this actually a 401k match from the employer or some sort of glitch? Neither - it's identifying the source of the units that are paying dividends (note the the column header). Half of your 0.665 ...
D Stanley's user avatar
  • 133k
7 votes
Accepted

Do employers typically match the contributions you put in proportionally?

First a few points: Most employers have a 401(k), 403(b), 457(b), TSP or similar plan. They don't generally get involved with an IRA. The total employee contribution to the 401(k) in 2021 is $19,500; ...
mhoran_psprep's user avatar
6 votes

Employer offering Roth 401k as well as traditional 401(k), established in career

(Really a comment on JoeTaxpayer's answer but it's too long) There's one big factor that for some people tips things strongly in favor of the Roth: While the limits on paper for traditional and Roth ...
Loren Pechtel's user avatar
6 votes
Accepted

Does 401k on H-1b visa make sense when there is an employer match?

Your calculations look right and I think your strategy is sound. The 10% penalty is enough to persuade most people from withdrawing from their 401(k) early but not enough to be really punitive in case ...
Craig W's user avatar
  • 15.8k

Only top scored, non community-wiki answers of a minimum length are eligible