[wje]

OK, here's the deal.  My current employer used to "seed" our 401k plan when I first started 5+ years ago with 2%.  We could take the 2% back as pay if we wanted, have it deposited in one of the various financial instruments, etc. that they offered.  Well, two years back, I received a bunch of information from the company on how they were "revising" the plan because they wanted to ensure their employees had enough money when retired - yada, yada, yada.  They indicated that from the current year, through the 6th year, they'd increase the amount applied to the 401k until it reached 8%.  I thought this was pretty nice.  Getting an extra 1% in the 401k as each anniversary passed by.
 
Now, on my anniversary dates, I get a nice little letter on how the 401k contribution has increased another 1%.  I'm starting to thing again, "wow, that's pretty nice".  So now, I'm having 4% going into the 401k by default.  All of my paper check stubs are all maintained electronically, so I can only see them when I've signed onto our company's site to view them and the money is direct deposited.  I'm now in the process of changing jobs - or, actually will be in one month from today.  I have some free time this evening, so I start to review my check stubs on line and look into the 401k contributions.  I spend about 10 minutes bouncing around, taking some notes, etc.
 
So, what is is that my company is doing?  Well, they've manipulated the 401k account.  The 2% contribution that I once used to get by "default" is no longer being applied as it once was.  The 4% contribution is coming completely out of my yearly (or rather weekly salary).  Hmm ... let me scratch my head on this for a moment.  So, they publish all this "propoganda" on how they're going to help us retire with a good retirement - yet, they stop the default 2% contributions, but still take out an additional 1% a year, by default from my checks to fund this action?
 
Believe me, I'm all about saving money for retirement.  I know I'm going to need everything I can get my hands on when that day arrives.  However, I feel a bit frustrated by being "duped" by my employer.  It's a shame that they had to publish that 60-page booklet of retirement propoganda, yet had to hide it in the contents that I'd be losing their 2% contribution and all contributions would come from me and only me.
 
What a bummer. 

 
And, this is a company that preaches "good ethics" policies like a religion.
 
 

 

[Uncle Erik]

I'm not a big fan of the 401(k). There's too much manipulation and I'm trying to get out of securities. By the end of the year, I'm going to dump my 401(k) and drop it into real property. A place to live or rental income are better than the stock market, which I've stopped trusting.

 

[wje]

I actually found my answer - well, sort of after staying up rather late and looking into this further.  I was able to get into the investment site where my 401k is housed.  I did located the company contribution by checking some of the various reports and running some queries.  I also reviewed my paperwork that the company sent me regarding the plan changes.  They talk about "matching" contributions, yet, I'm still getting the same rate from them as I did 5.5 years ago.  I guess I've reached the maximum matching point.  Yet, for the next 4 years, they would continue to take an extra 1% per year from my own pay to feed into the 401k account until a total of 8% of my salary would be achieved.  I could, however, change that option if I desired them not to take the money.   
 
Now, the real stickler.  It looks like I might have to move the 401k money to my own 401k as soon as I leave the company in 4 weeks.  The company contribution that they're making isn't into the index fund that my contribution is going into.  Their contribution is going into the ESOP or (Employee Stock Ownership Plan).  Since I'll still be utilizing and supporting software that my current company builds and supplies, I don't want the ESOP stock in my hands due to ethical reasons.
 
Ah ... such is life.     

 

[m0ltar]

I Agree completely. The 401k plan offered by my work was seriously hyped up before they launched it. After they launched, all it did was give you an alternate place to put your money. They outlined no benefit to the plan.
 
Dont most companies offer money matching options?

 

[wje]

Quote:

I Agree completely. The 401k plan offered by my work was seriously hyped up before they launched it. After they launched, all it did was give you an alternate place to put your money. They outlined no benefit to the plan.
 
Dont most companies offer money matching options?

It's all hard to tell whether they offer matching money or not.  I think right now, I'm just getting 2% from the company and 4% of my own is going into the plan.  My first corporate employer matched up to 6% of 401k contributions.  I think at the time, employees were limited (by the IRS) where they couldn't contribute more than 15% of the income into their 401k plans.  However, this corporate employer (Fortune 5 company) also provided a pension plan - which I'll get some proceeds of when I reach retirement age because I was vested and spent 17 years of service with them.
 
Now, most companies have beefed up vacation plans a bit - giving 3 weeks to first year employees instead of the usual 2 weeks and tossing a few percent into their 401k.  This, of course, is being done in lieu of a pension plan.
 
For the agency that I'm heading into, it will have a pension plan, but not a 401k plan.  I'll have the option to contribute either 4% or 5 1/3% of my salary into the plan.  Approximately, each year, the agency "funds" the plan by dumping about 15% into the plan.  Pensions are usually calculated by looking at your total years of service, money paid into the plan and an average of your last 3 years of salary.  Then they perform some additional calculations against some "magic"  number to come up with the payment amount that you can receive.  Usually, if you opt to just receive pension benefits during the course of "your" life, the payments will be higher.  However, if you decide to have the payments go through the lifetime of your spouse - assuming they'll outlive you, the monthly payments tend to be a bit smaller.
 

 

[appophylite]

My company offers both a pension plan and a 401K. The pension plan is not Employee contribution, meaning that the company contributes a specific amount to the account monthly based upon the employee's current salary and time with the company. With the 401K, the employee can contribute as much as they want to the account and the company will match up to the initial 5% of the employee's salary that they contribute. They allow you to change your contribution rate as much and as many times as the employee wants to and once it is in the account, they will allow you to play with how much is invested in what funds. I played with it a little at first, and then quickly decided to just look at it a couple of times a quarter to make sure of how it is doing. Personally everything is looking good so far in that I can see that the amount I chose to contribute is what is being pulled out of my salary and neither the company match or company contribution to pension is coming out of my salary. Right now, I'm distributed between my 401K and pension plan with my company (I will be vested in the pension plan in another year, and will be officially able to draw money from it if necessary), but also have money in a Roth IRA and a Mutual Fund account I decided to try out last year. Like Uncle Erik says, my next plan will likely be some investment into real estate and possibly a small investment account I'll set up myself independent of everyone else and see if I can't personally beat the rate of return on the Mutual Fund and 401K.

 

[The Monkey]

What's being discussed here is pretty basic retirement plan stuff.  But companies do a lousy job of educating their employees.  Google "defined contribution plans" and you should get some helpful hits.  Also, the DOL's website is pretty good.  Start here: http://www.dol.gov/ebsa/publications/wyskapr.html