22F here. I’ve been working at my current job for a little over a year now. The requirements to join the 401k is completing at least one year of service and working 1000 hours which I have. However, I expect to be leaving in a few months to take a higher paying office job. I work as an EMT right now but am debating whether to get my masters or go to medical school.
The employer matches 100% of deferrals up to 3% of compensation and then 50% of deferrals on 3% to 5% of compensation. For 1-2 years of service at my job, the vested percentage of employer contributions is 20%. I’m still relatively new to the financial world. Would it be wise to join the 401K plan?
Should I start contributing to a work 401k if I know I am leaving in a few months?
byu/ilovemcdonaldssprite inpersonalfinance
Posted by ilovemcdonaldssprite
14 Comments
Yes. It is about habit and using a portion of every check towards retirement
Especially so if they match. Take even more of their money.
> Would it be wise to join the 401K plan?
Sure.
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Sounds like you are asking about a framework for what to do with money.
Start with reviewing the Prime Directive in the PF Wiki. It will answer your question and many other questions you didn’t realize you should be asking.
* https://www.reddit.com//r/personalfinance/wiki/commontopics
>For 1-2 years of service at my job, the vested percentage of employer contributions is 20%.
Is that 1-2 years of being employed or participating in the 401K?
What if you stay longer than you plan?
yep. don’t let “i might leave” turn into “i skipped free money.”
grab the match while you’re there, even if only part of it vests. future you can clean up the rollover later.
Its worth it get a match. The match is free money, even if its just $100.
Yep, join and bank the matching and your own savings. Just don’t cash out when you leave. If they make you close out when you leave because you don’t have a minimum balance(my old employer had a rule for like $5k to keep an account with their 401k if you left), make sure to roll it over to an IRA so you’re not taxed on it – and you keep your savings momentum going.
Yes, it’s free money.
Time in the market beats timing the market.
A lot of people in here saying the match is free money and they probably arent wrong. And its good advice to start investing in your retirement regardless of match. So yes, do it.
But, double check if there is any vesting schedule on the employer contributions. Anything you contribute and the gains on that are yours to keep. But there may be a vesting period on their portion you may forfeit when you leave after a year.
Again, shouldnt stop you from doing it but may be worth knowing rather than being surprised by it down the road.
Always take the free money if they match but don’t put more than they match. Invest the deference in something that grows tax free instead of tax deferred
Absolutely. Get the most from you can from your current employer, especially if you are 100% vested.
YES. It’s free money….as long as it 100% vested immediately. I’d look into the vestment schedule.
It’s free money . Do you not like free money ? Plus we in the saving & investing habit .
No. Don’t bother with a 401k. If you have to leave it’s a hassle and since you are leaving soon you will probably be cashed out and have to try to roll it over and good luck rolling over a small amount.
You’re better off with a Roth IRA until you are doing well financially.