Contribute to 401k?

[Esoterik]

I started with a new company. I'm not eligible for the 401k match until I've been with the company for a year. I have about 6 months till that happens. This job also has a pension. At one year I'll be 20% vested for the pension and fully vested at one year for the 4% 401k match. I'm currently contributing to the 401k and my roth ira. My question is do you think I should even bother contributing to the 401k right now or wait till I qualify for the match.

[BuckyBadger]

If you can do it without making sacrifices to your lifestyle that you are unwilling to make, I'd contribute.

You'll never get the chance to put that money away again. I think everyone should put as much into tax advantaged retirement accounts as humanly possible/

[disneysteve]

Do you not get a match until you've been there for a year or are you not vested in the match until you've been there for a year? Those are two very different things.

That said, regardless of the answer to the question, you should absolutely be contributing to your 401k.

[Esoterik]

Do you not get a match until you've been there for a year or are you not vested in the match until you've been there for a year? Those are two very different thing
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I do not get a match until I've worked for a year. But I'll be 100% vested in the 401k after one year. Also, after one year, I'll be 20% vested for the 9% pension.

[clintdavis]

Esoterik, are you completely debt free, and do you have an emergency fund of 6 months of your living expenses? If not, I would hold off on putting anything into retirement and throw every extra bit of cash you can at paying off all of your debt (other than mortgages) and building up a good emergency fund. Paying off your debt and eliminating those monthly payments will free up your income so that you can put your retirement savings into overdrive.

What debts do you have?

Thanks for sharing!

[Esoterik]

No revolving credit card debt.
No car loan. Own my car.
I rent, so no mortgage payment.
Student loans are $10k @ 2%
One month EF. (I'm working on this right now)

[JoshuaHeckathorn]

No revolving credit card debt.
No car loan. Own my car.
I rent, so no mortgage payment.
Student loans are $10k @ 2%
One month EF. (I'm working on this right now)

I would want to build up my EF to at least 6 months over the course of the year while still trying to max out my 401K. Based upon your current income and expenses, do you think you can manage that? Even if you can't quite hit the 6-month EF mark, I wouldn't forgo contributing to my 401K. That's a mistake IMO.

[Esoterik]

Agreed about getting the EF. Its top priority to me right. I should have my full EF hopefully in the next few months. But main question is should I contribute to a 401k without a match? Right now I'm only contributing up to what the match will be when I qualify. (4% match)

[debtfreeme]

Contribute to all the retirement plans you can do. Cut your expenses to make it happen if necessary. Pensions are no longer to be thought of guaranteed and with the average American having 10 jobs before retirement now, save whenever you can.

[Arash Kamangir]

So....

Here are the figures: your max (employee) contrib amount to a 401(k) for 2011, assum age under 50, is $16500; for IRAs (roth or otherwise) is $5000. Assuming you fully contribute to your Roth, you're still leaving $11500 on the table (full cal year) that could grow tax free for you until you're ready to take that money out and then pay the taxes on it then. Additionally, I'm pretty sure, not 100% though, you're getting the employer match but just not fully vested in it after the 1 year benefit waiting period. Someone else has asked for clarification on this earlier. If I were you, I'd bend over backwards to start max'ing out your 401(k) contribs (fully max'ing, the $16500 figure, not max'ing for employer match) from very early on so that you'll get used to it, and hopefully, by the time you're ready to tap into those funds, at retirement time and NOT earlier for a loan or anything of the sort, you'll be living the good life. That's what I would do anyway.

[JoshuaHeckathorn]

But main question is should I contribute to a 401k without a match? Right now I'm only contributing up to what the match will be when I qualify. (4% match)

Yes, contribute the full $16,500, and max out your ROTH too.