401K Plan Question

Thu, Feb 19, 2009

General, Retirement

The company my spouse works for has their 401K set up like this: 50% up to 4% of your salary, after 2 years of service they will contribute 20% on anything over the 4%, 3 years $40, 4 years 60% 5 years 80% and 6 years and over 100%. Is this legal? It  doesn’t make any sense to me.

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2 Responses to “401K Plan Question”

  1. Donnie Says:
    February 19th, 2009 at 2:25 pm

    I’m sure it is legal. The question I would ask is: after 2-6 years of service, is the first 4% still matched at 50%? And also, the 2nd part of your statement doesn’t specify a limit. It just says anything over 4%. I believe there may be some missing information. You could theoretically invest the maximum and have the company match all of it.

    My company does it like this:
    0-1 Year: 0% match
    1-2 Year: 50% match up to 8%
    2-3 Year: 75% match up to 8%
    5 Years+: 100% match up to 8%

    Reply

  2. pbucelwicz Says:
    February 19th, 2009 at 5:47 pm

    That is legal. The company is allowed to do what ever they want as far as contributions. They don’t have to match if they don’t want to I don’t think.

    Basically what is happening is they are contributing more and more the longer you are with the company.

    If I follow what you said correctly, they are matching 50% up to the first 4% then there after they match 20%, 40%, 60%, 80%, 100% for anything you put in over the first 4%.

    @Donne You have a good question, I think they are still matching 50% on the first 4%.

    Reply


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