the company will match 35cents to a dollar, up to the first 6% of….
no! not my salary, but my 401k contribution!!!

has anyone heard of something like this? I think it is a symbolic match!

@LAL: Right you are. I’d rather have a job, too. I think anyone would.

I think they and many others are grateful to have jobs and sounds like you are too! Right now a job is even more important than a 401k.

You can’t fund a 401k if you have no money to fund it with. And you need a job to fund it.

That’s a good point. I didn’t think about that.Yes, it’s true that a good retirement plan would attract higher quality employees…

What about this though. Do you have any power to change the company’s plan? Is it really going to help you by complaining about what you can’t change?

“There is no where else to invest?” Are you kidding me? Yes, it’s true that index funds are better than high cost managed funds. But that’s like saying it’s better to get kicked in the stomach than having an eye poked out. But who wants to be kicked in the stomach?

There are innumerable ways to invest. Maybe the 401K doesn’t give you access to them. In that case, it’s better that your employer’s plan sucks. Or, maybe it’s better to quit and roll it over into a self directed IRA…

Here’s my point. It’s not a question of your 401K sucking. It’s a question of how you invest money.

@Glen: I see your point, but I still think it sucks. I suppose my argument is that of plans with some sort of a match, ours is pretty ugly in percentage terms. You are right that some plans have no match which is just… well, pathetic.

@D Smith: I guess it is incentive to get you to stay. I used to work for a company like that but I think the vesting period was 5 years not 10. Ten is a long time depending on your profession.

@the weakonomist: I do hate your plan! Wow, 100% of 6% would be awesome. With your stock are you allowed to sell it quickly for diversification purposes?

@Claire: I can only dream of a 401k like that. Obviously other things come into job satisfaction, but that would definitely make me more satisfied.

@PT: I can understand a company doing this as a way to cut costs. But I’ve got to think there are larger line items (cough executive compensation) that might take a hit first rather than the future retirement of the workers. That is unless it has come down to “we cut all of these benefits or the company goes under”… in which case you are likely just prolonging the inevitable.

@Michael: That’s awesome man. What happens in a down year? Do they take money out of your 401k? (Just kidding…)

@Ricky: You are right. There is no obligation, no written law, that says they have to offer a 401k or a 401k match. My argument is part of attracting the most talented workers is to offer the most impressive benefits. I suppose my company doesn’t take that view.

@Oblivious: Now this is really interesting to me. Without prying too much, why did she change jobs? I’m guessing there are other benefits, fringe or not, that made a move the right thing to do. If someone offered to double my pay today, but drop my 401k match completely, I would do it in a heartbeat. I’m curious as to her reasons.

@Brian: I completely agree. Companies sell products and then don’t realize that when a 401k plan administrator walks into the building that they are selling something to. I’m thinking there isn’t a lot of shopping around going on, but I could be wrong.

@Frank: Interesting tidbit! Do you happen to know what the percentage has to be for something like that to kick in? I’m a small fish in a medium sized pond so I doubt I could convince anyone to stop.

@B7: I love comments like this. They get me riled up. I never said it was my employer’s job to have a “good” retirement plan. But think of it competitively. Two identical (or close to it) firms are vying for the same pot of qualified potential employees out in the job market. One offers a great company match or other benefits. The other does not. Where do you think the highest qualified folks try to go first?

If you read the post you’ll notice I said I’ll take any free money they hand my way. But if competing firms are offering set percentages — 3 or 6% as others have commented — why wouldn’t you try to stay competitive?

As to your other comment I disagree completely. If index funds suck then there is no where to invest. Period. Now indexes are down this year (quite a lot obviously), but they are tracking the market. Which is also down. Index funds cost significantly less than actively managed funds and generally with equal or better results. Would you prefer to stick your 401k investments in a mattress? You can disagree, that’s fine. But offer an alternative investment vehicle so we can discuss it.

@Flyerist: That’s what I would do if I were in your situation (assuming your debt is non-mortgage debt). If you don’t have to contribute to get the match, take the money and run… and use what you earn to get to a debt-free lifestyle. Congrats, that’s a great match.

Why is it your employer’s job to have a “good” retirement plan for you? Why isn’t $750 in free money enough?

Besides, how would you invest if it had a great plan? Index funds suck too…

Company matches exist for only one reason: as a bribe to lower-paid employees to do what’s probably in their own best interests and participate in the plan. The IRS has complicated rules that limit how skewed 401(k) participation can be to higher-paid employees. If it’s too much to the high-paid folks and not enough of the low-paid folks then the plan actaully has to give back some money to the higher-paid workers at the end of the year.

Ironically, if you’re working in a place with relatively responsible and thoughtful types who all contribute to the 401(k) your company is less likely to match.