My boss told me that he was finally starting a 401k. The thing is he said that the company will match 4% for every 5% contributed. That sounds fine but I think that was talking about the company adding the funds once a year as compared to every paycheck. Isn't it better for me to have the company match every pay? Instead of just me adding every pay and the company putting in a lump sum at the end of the year. I feel that I wont earn as much money. Does this seem right ?
2007-08-23 07:52:46 · 9 answers · asked by DAN Z 2 in Business & Finance ➔ Personal Finance
I've never heard of any employer doing the match per paycheck. I have only ever heard of it being done annually. Your contributions would get pulled out every check, but the funds they kick in would be yearly.
Being that is completely government regulated, I doubt if the employer has a lot of flexibility on this.
Also, usually the match is dependent on the company being profitable, and most companies financial reporting is done quarterly, not by the week.
2007-08-23 08:01:29 · answer #1 · answered by whiskeyman510 7 · 0⤊ 0⤋
It is completely legal for your employer to deposit the 401k match once a year, but no less frequently than once a year. The federal law that covers this issue is called the Employee Retirement Income Security Act of 1974 (ERISA).
It would be better for you as an employee to have that money deposited every paycheck, so it can earn money for you all that time. Sadly, there's nothing requiring your employer to do so.
On the other hand, the money that YOU put into your 401k (the money that comes out of your paycheck) must be deposited into the 401k account as soon as practical, and never any later than the 15th day of the month following each payday.
2007-08-23 08:14:28 · answer #2 · answered by Plea_of_insanity 5 · 3⤊ 0⤋
It would be better to have them match the amount for each pay period so that you can take advantage of compounding gains through the year. Also, having a once-per-year deposit may mean that you lose it if you do not stay with the company.
However, you should be thankful that you get a match. Take advantage of that free money.
2007-08-23 08:00:08 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Most companies automatically take money out of every paycheck and at the same time automatically do their contribution.
If they're giving you 4% of every 5% that works out to almost nothing. Or does it mean they contribute 4/5ths of what you contribute? If so, that's good.
A lot of places contribute 50% of your 10% (so a net of 5% of your pay).
2007-08-23 08:02:20 · answer #4 · answered by mikeburns55 5 · 0⤊ 2⤋
it's however the employer set up the 401k program, lockheed-martin match 50% of what the empolyee contributred weekly then then this money is invested to whatever the employee elective. yearly sucks because you losing money on the investment
2007-08-23 08:56:56 · answer #5 · answered by willliam d 2 · 0⤊ 0⤋
depends on the vesting policy -- if theirs is 100% vested when it come in your will not lose as much say if their's vest at 20% a year -- if that is the case you are better off with the lump sum!!!
2007-08-26 15:35:41 · answer #6 · answered by Anonymous · 0⤊ 0⤋
So in other words, your employer giving you FREE money isn't good enough. You want your FREE money given to you on YOUR terms, according to YOUR schedule and your WHIMS.
What a greedy ungrateful SOB
2007-08-23 08:05:56 · answer #7 · answered by Craig T 6 · 0⤊ 3⤋
Doing it only once a year is unusual.
2007-08-23 07:59:50 · answer #8 · answered by ♫ Sweet Honesty ♫ 5 · 0⤊ 0⤋
watever
2007-08-23 08:00:06 · answer #9 · answered by Anonymous · 0⤊ 3⤋