Would you start a second 401K?

[bjl584]

So, the place that I work part time is going to offer their 401K plan to part time employees. Dollar for dollar match up to 4% and fully vested from day one. It's a pretty good deal. But, I already have a 401K at my full time job. Also, this is a part time job that I took on for extra money in my pocket. I never really approached it as a long term investment. I am eligible to participate if I want to, as I don't max out my 401K at my full time job. The 100% vesting from day one is appealing though. What would you guys do?

[disneysteve]

I would absolutely do it. Fully vested and a great match. Why wouldn't you? If you leave the job at some point, you can just roll it into an IRA.

[bjl584]

I would absolutely do it. Fully vested and a great match. Why wouldn't you? If you leave the job at some point, you can just roll it into an IRA.

Yes. That's exactly what I would do. I don't plan on keeping the job forever.

[scfr]

As long as you like the fund choices and don't absolutely need the money to meet your other obligations (and I'm pretty sure you don't) I vote yes, do it up to the company match.

[Petunia 100]

I would definitely invest at least 4% of my salary. But remember, the 401k annual limit is the same no matter how many different plans you use. You can't contribute more than 17.5k for 2014 (or 23k if age 50 and over).

[bennkar]

I see a couple of issues:

• You need to be sure not to go over the limit for 401k contributions when you combine both 401ks. (You knew this already)
• Does either company have a limit to the match?
• Does one company have a higher percentage match?
• Does one of the 401ks have better funds or lower fees than the other?

Based on the answers to these questions, you may be better off with exclusively either one of the 401ks, or perhaps a strategic split between the two. Without these items being answered, the best answer is impossible to say.

[bjl584]

I see a couple of issues:

• You need to be sure not to go over the limit for 401k contributions when you combine both 401ks. (You knew this already)
• Does either company have a limit to the match?
• Does one company have a higher percentage match?
• Does one of the 401ks have better funds or lower fees than the other?

Based on the answers to these questions, you may be better off with exclusively either one of the 401ks, or perhaps a strategic split between the two. Without these items being answered, the best answer is impossible to say.

I've considered all of this.

I would not be going over the limit of $17,500 a year.
Both have a limit to the match.
The match is actually a tad better at the part time job, but it's a part time job. Meaning that even if the match is better and the fund choices are better, I'm not really earning enough there to take full advantage. Even if I put in 100% of my pay at my part time job it still wouldn't match what I'm contributing at my full time job's 401K.

[disneysteve]

Even if I put in 100% of my pay at my part time job

Which you probably aren't even allowed to do. I tried it when my wife was working but 50% was the most they would allow. We wanted to do 100% but they said no.

[bjl584]

Which you probably aren't even allowed to do. I tried it when my wife was working but 50% was the most they would allow. We wanted to do 100% but they said no.

Actually I am allowed to if I want. I was surprised, but they allow it.

I wouldn't however. That would take away the point of having a part time job for extra spending money.

I might go 10% though.

[bennkar]

Actually I am allowed to if I want. I was surprised, but they allow it.

I wouldn't however. That would take away the point of having a part time job for extra spending money.

I might go 10% though.

Personally I would take whatever you want to save overall and put it entirely into the part time job's 401k. If they give a higher match, why wouldn't you? Yes, you want more money, so just lower your contribution to the 401k at the full time job to compensate. Or is there some reason you wouldn't want to do it that way?

When you finally leave the part time job, roll the 401k over to your full time job's 401k (or into an IRA - whatever works best for you). Based on what you said, this should give you more money at the end.

[moneysma]

I'd do it. Even if you only invest up to the match, it's still free money and you will still have spending money left over. When I worked part-time in college, I had the chance to invest in the 401k plan. I kick myself I didn't do it. I could have easily still gotten by on $20 less each week and would have gotten a nice jump start on my retirement savings.

[TBH]

I have a 401k through my part time job. The company matches 5 percent and I put in 15 percent. I didn't think I'd keep the job for long either, but at this point I've been there for more than 10 years and my 401k balance is pretty sizable.

Here's what I figure. Even if you just have the part time job for extra money, that money is still part of your lifestyle and your cost of living. You want to be able to replace that income in retirement too. Think of the 401k at your main job as the money you're going to use to replace your living expenses, your essentials, etc. And think of the 401k at your part time job as your fun money during retirement, the money that's going to allow you to order the drink AND the appetizer when you go out to eat, or take an extra trip once in a while, just like the part time job allows you to do right now.

[bjl584]

Personally I would take whatever you want to save overall and put it entirely into the part time job's 401k. If they give a higher match, why wouldn't you? Yes, you want more money, so just lower your contribution to the 401k at the full time job to compensate. Or is there some reason you wouldn't want to do it that way?

There are two things stopping me from doing that right now:

1) I haven't had a chance to study the fund offerings at the part time job yet. This program was just rolled out last week, and I've yet to receive any information on it.

2) I'm not sure how long I'm going to be keeping this job. I've recently been promoted at my full time job, plus I'm close to clearing up some debt, so my plan was to quit this job in 6 months or so. I might stay longer, but it's up in the air at this point.

[creditcardfree]

I'd do it. Even a little bit saved to get the match is worth it, even if you only hold the job for one or two months more. It adds up and you can roll that money into an IRA when you quit.

[scfr]

There are two things stopping me from doing that right now:

1) I haven't had a chance to study the fund offerings at the part time job yet. This program was just rolled out last week, and I've yet to receive any information on it.

2) I'm not sure how long I'm going to be keeping this job. I've recently been promoted at my full time job, plus I'm close to clearing up some debt, so my plan was to quit this job in 6 months or so. I might stay longer, but it's up in the air at this point.

The debt that needs to be cleared up would be a possible reason NOT to participate in the 401K at the new company. It may make more sense to focus on debt pay-down instead.

On the other hand, the chance that you might leave the PT job soon could be a factor in favor of participating. Do you already have a rollover IRA invested in funds you like? If so, when you leave the PT job you could just move the funds to the rollover IRA.