Working for a growing company - just started to offer a 401K plan without an employer match. Should I sign up?

Question

You basic offerings for a 401K, but because it's "new" they're not offering an employer match - The first time I've seen one offered as such - is it still wise to invest in this or perhaps use other alternatives in retirement planning?

Answer 1

Alternative retiring plan because:
:- You have a wider option of investments to choose from.
:- You don't have to wait until the min 59 and half years to get the payoff
:- You do not have to go over all the troubles of roll-over etc if you leave
:- much easier to change contribution per month without waiting periods.
BUT if they offer a match, it is ALMOST always better to go with the employer 401k plan.

Answer 2

actually such a plan is more typical than you might think. But as for whehter to do it or not...depends on whether you would be as diligent in investing into an IRA as you would be forced into being with your 401k. There are a few benefits for using your 401k. 1) the tax benefit is immediate...the 401k comes pre-tax and the IRA comes after-tax and you get the benefit come tax time. 2) You may actually have better investments available in your 401(k). It could offer lower expense ratios in quality funds then you can have access to in an IRA. 3) If you're going to invest in mutual funds...inside a 401k or in an ira they're the same...stocks however might not be available to you in your 401k.

for 95% of america...401k is a better option AND that includes comparing against the ROTH IRA.

Answer 3

401K's are generally the best way to go (with or without a match). More important is.... how good are the investment choices? Small/new companies sometimes go with Banks or Insurance companies with their 401K's..... these are usually the worst plans out there. You need to read a couple of good book on retirement investing. Not to be an expert. Just to know what's good and not so good.

Also;
Look at ROTH IRA's.

Good luck!

Answer 4

Most definitly a wise investment. I worked for a company that had a 401k plan without employer match. I was in a low income bracket, but I started by putting $20 dollars out of each check into my 401k. Everytime I got my annual raise, I upped the amount. If you don't see it, you don't miss it. I finally got up to where I was putting 15% in. I only had 10 yrs in at the co. before I lost my job, so I had 9 years of investing into the 401k and by the time I left, I had 33,000+. It is now up to almost $45,000. I do not have to start drawing out of it for another 9 years. My husband worked for UPS, which paid very well. He started putting 15% into his 401k and now that he is 72, we have started taking out the min. amount and it is a good suppliment for our ss income. My son worked for a co. and started investing asap into a 401k. He has since changed co's but was able to move his 401k over to the new co. so his investment goes on uninterupted. Even though we also have other pensions, the 401k is one of our best and easiest investments. GO FOR IT!!!!

Answer 5

Dari It means that for every dollar hat you put in, they will put in $.50. Most 401Ks allow a normal non tax maximum of 7% of your gross income. If you choose that percent and it equals $150 every payday, your company will put in an additional $75. WHERE else can you get a fifty percent return in one month? Take advantage of the 401K and be very aggressive in the investments you choose! A good large cap stock fund is a great choice. Soccerref

Answer 6

If you are not disciplined it would at least get you started on retirement path via forced savings. If you are would limit participation unless could fully fund Roth Ira at same time with no problem. If investment options in 401k bad would just ignore it.

Answer 7

Yes, do it. even if they dont match right now, you will be able to put away upto $15k per year & reduce your taxable income by that amount. At leat you will be investing something rather than nothing at all.