Have you ever turned down a salary bonus?

Should I contribute to a 401k with a vesting schedule?

Math - Half the game is 3% or $ 3900. After 5 years, $ 19,500.

If you stay, you are vested and have an additional $ 20,000 (I hope it's actually way more). For you it is like a 2 month salary bonus after 5 years.

If you leave early, the good news is that even if the expenses weren't huge within the plan, you will have the money you invested along with what was previously vested. You move that to an IRA and choose your own frugal funds or ETFs.

For me (as Duff said there is no answer, to be clear, this is my feeling or preference, not the gospel) 6% is far too little to be saved as a percentage of my income. So if the 401 (k) fees were 0.8% or more, for example, I would use the 6% to get the potential match and then save on the side.

Our answers may change slightly depending on the exact fees you face.

Dilip Sarwate

Joe and also @Derek is this 401k plan that the Employee contributions limited to 6%, half of which is taken over by the employer, or is the employer Employees, who decides 6% is all one can afford to retire on the 401k plan in the current circumstances? Aren't 401,000 fees a fraction of the contribution (usually plan assets on behalf of the employee) instead of a fraction of the salary? That said, the 401k fee is 0.8% (let's say) of the contribution (let's say 6%), and so the cost is actually 6% x 0.8% = 0.048% of the salary, not 0.8% of the Salary?

JoeTaxpayer ♦

I've read Derek's statements to mean that the first 6% of the paid salary will match, with the company adding 3% but no more. (Then it is vested over time). Yes, my example of 0.8% is the annual annual fee of 80 cents per $ 100. My position is that 1% or more and 10 years in the fund wipes out much of the potential tax benefit. So “depositing” for the match becomes my advice. Sorry if my answer was not clear, thanks for the clarification.


Sorry, I didn't respond earlier. The 6% is exactly what they bring together. I suppose I can enter as much as it is legal to add.

JoeTaxpayer ♦

@Derek - My answer is: I would certainly deposit into the game. More than that is a decision based on the decisions and expenses of the fund.