Thursday, March 19, 2015

My 401(k) is Vested!

Pretty huge milestone for me today, all of my employer's contributions to my retirement 401(k) are vested, which means quit or fire, they're mine! I don't talk about money often, but a few things worth mentioning, particularly to 20something because chances are no one ever told you these things. 

- A 401(k) is a retirement plan. You contribute part of your paycheck, and typically your employer contributes some money as well. 
- It is important for you financial future to get all of your possible employer contributions. For example, the employer might match every dollar of your contributions up to 6%. So if your salary was $2000 a month, you could contribute $120 a month and your employer would contribute $120 as well. It's okay to contribute more than the employer match, but you aren't getting any "free money" for contributing more than the match. 
- This money is somewhat difficult to get at until you retire so it doesn't count as your emergency fund or new car fund. 
- When you leave a job, you can take all of the vested portion with you. It has to remain in a retirement account, like an IRA, but it does not have to stay in the previous employer's 401(k) plan.

Basically the two important things are, get the full employer match, and don't leave the company before it is vested. 

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