New 401k

[Sum Dum Gai]

So the match is fairly standard, 50% up to 6% of gross salary. So 3% total. But the vesting... wtf? 0% vested for the first 3 years, then 100% after that. 3 years... this isn't a damn pension you cheap sons of bitches. You're really going to make me jump through hoops for 3%? Really?

When did business executives get so petty? I get that pensions were a problem because workers started living to 180 through wicked expensive medical care. The business didn't want to be on the hook for all that, and have to deal with the uncertainty. Fine. I totally understand that. I actually prefer my 401k to a pension anyway, since I can't count on staying with a company long enough to ever get a decent pension. Those are the new rules and I accept them. But then you have to be a pain in the ass on your paltry match as well?

[Deleted]

You are their bitch, Get used to it.

[andi9899]

Mine is the same way as far as the vesting goes. I just started here, so I can't tell you when it changed. But you're not alone.

But my match is much better.

[justme]

How long is the contract they won for what you do? It's a pretty crappy vesting schedule in the gov't contractor world where people tend to move wherever the contract goes vs staying with the company.

[The Walk of the Penguin Mich]

My 403b is the same way too, you get 0% unless you stay for 5 years, but they contribute 10% of your salary.

It is all or nothing, if you leave before the 5 years are up, you get squat.

[Sum Dum Gai]

But my match is much better.

I've been in the private sector for roughly 5.5 years. This will be my third company in that time, and each time I've changed the match has gone down. First company was 7% whether you contributed or not, current company was a 4% match as long as you contributed 5%, and this one will be 3% if you contribute 6%.

How long is the contract they won for what you do?

One year, with four option years. I don't expect them to keep it the whole time. My current company had just renewed the same type of contract two years ago. We worked the base year, one option year, then they decided not to renew the next year and renegotiate instead.

With possible sequestration coming, maybe defense cuts on top of that, I imagine quite a few DoD agencies will be deciding not to renew contracts and renegotiating them instead.

[ontrack]

My husband is a government contractor too, and his vesting is worse. 25% after 2 years and then another 25% each year after that, taking a full 5 years to fully vest. The match is I believe 5%.

[frep]

Nov 6, 2012 14:36:05 GMT -5 The Walk of the Penguin Mich said:

My 403b is the same way too, you get 0% unless you stay for 5 years, but they contribute 10% of your salary.

It is all or nothing, if you leave before the 5 years are up, you get squat.

Wow....10% is huge. Everyone around here seems to be 2-3%.

[lynnerself]

I get a 4% contribution and a 3% match.
But you don't even get into the system until you have been employed for 1 year.
And then vesting is 20% more each year until you are fully vested at 5 years (well 6 since you actually started).

[midjd]

I work for the state so it's a little different... they kick in 3% off the bat and then another 7% that takes 5 years to vest. Another 5 years after that to vest into the pension.

DH's (private) employer makes you wait a year to become eligible for the 401(k) and there is no match, so it could be worse!

[telephus44]

It's called cliff vesting. I've worked a few places (and DH has worked a few places) that vested that way. A 3 year cliff isn't uncommon.

[Bob Ross]

You work in technology in SF, where employees jump ship daily from douchenozzle.com to go work at douchecanoe.com

Employers don't want to give you that free match money until you've put in the time filing a TPS report or two.

[Sum Dum Gai]

some of us don't even get match......

I won't either because the companies that won this contract are giving every indication of being totally incapable of actually meeting it. Right now I'd say there's maybe a 10% chance this company still has the contract in three years.

[Bob Ross]

Nov 6, 2012 15:26:07 GMT -5 Sum Dum Gai said:

some of us don't even get match......

I won't either because the companies that won this contract are giving every indication of being totally incapable of actually meeting it. Right now I'd say there's maybe a 10% chance this company still has the contract in three years.

At which time you'll be hired by the new contract winner, so stop yer bitchin' and commence with the thumb twiddling until that time.

Or go make a mint at douchecanoe.com

Your choice.

[Sum Dum Gai]

It's called cliff vesting. I've worked a few places (and DH has worked a few places) that vested that way. A 3 year cliff isn't uncommon.

And cliff vesting made sense when we're talking about pensions. You don't want to promise some guy a check and medical care for life if he's only going to work for you for a month. But vesting on a 401k match makes you look cheap, greedy, and heartless.

[telephus44]

No, but you want to make sure he sticks around for a couple of years. Consider it a "longetivity bonus"

[Sum Dum Gai]

No, but you want to make sure he sticks around for a couple of years.

Why? What do they care, they aren't training me. They aren't investing in me. I didn't get a big sign on bonus, stock options, or what have you. I've been doing this job for years. The only difference going forward will be the company name on my paycheck. I still come in here and work for $X/hr plus benefits, while they bill all my time to the government at $X*3, or somewhere right around there. I make them money every hour that I show up. I guarantee you that they don't honestly give a shit whether I stay for 2 months or 20 years. All they care about is having a warm body, any body, in my seat billing those hours to Uncle Sam. That's it.

And I'm OK with that. $X/hr is a fair trade for my time. I'm making money, they're making money, everyone is happy. But don't get cheap with my benefits. The 3% you might save by not having to give me my match is nothing.

[adela76]

Nov 6, 2012 14:40:03 GMT -5 frep said:

Nov 6, 2012 14:36:05 GMT -5 The Walk of the Penguin Mich said:

My 403b is the same way too, you get 0% unless you stay for 5 years, but they contribute 10% of your salary.

It is all or nothing, if you leave before the 5 years are up, you get squat.

Wow....10% is huge. Everyone around here seems to be 2-3%.

When I worked for U of M back in 2005, it was the same 10%/5% but it was vested immediately. I only worked there a year, but every 401K since has compared badly. I've never stayed long enough in one place to become vested (the salary increases have always been worth the move).

[Deleted]

When I worked for Macy's (a Federated store), there was cliff vesting. I believe it was 5 years. It was 15 years to get a pension. Such a surprise! They closed the store before the 15 years were up, and reopened it in a couple of years. To be fair, they also owned a regional dept. store in the same mall so a few elite employees were able to transfer there and vest their pensions. And it was the regional dept. store chain that they eventually closed and renamed Macy's. They did have to immediately vest us in the 401k, though, when they closed the store originally. And they "paid out" the pension, which after three years, was about $450 for me.

The point is cliff vesting is fairly common. Even my state pension has it. You don't vest until 10 years. If you quit working before you vest, you can withdraw (no match) or let it ride for five years. If you haven't returned in five years, then it automatically terminates with no match. You CAN buy back your service (at 8% a year, which is pretty pricey given the last ten year's returns), though.

[Sum Dum Gai]

The point is cliff vesting is fairly common. Even my state pension has it.

Right, but those are pensions. Every pension has a lengthy vesting schedule. By dumping pensions and going with defined contribution plans instead they put the onus of retirement savings, and the price uncertainty that comes with that, on the employee. That's fine. But to keep a vesting schedule as well. That's just cheap. Neither of my two previous companies had it. You were 100% vested and able to participate from day 1. They both had more generous matches too.

[Deleted]

Even my kick ass company has 401k vesting for NEW employees.. 50% vested after 1 year of employment, 100% vested after 2 years of employment.

Stock grants vest 1/3rd a year for 3 years. Golden handcuffs as they are called.

[tcu2003]

My company does this for 401k's and I agree - annoying. You're 20% vested from employer contributions after 2 years, and they add another 20% each of the next 4 years. At least their match is okay - if you contribute 9%, they'll match 5.125%.

[skubikky]

Nov 6, 2012 16:58:42 GMT -5 Sum Dum Gai said:

But don't get cheap with my benefits. The 3% you might save by not having to give me my match is nothing.

Benefits are discretionary. Talk to those that get no match on their 401(k). It's quite common and reasonable I think that an employer imposes a vesting schedule.

My company gives profit sharing that can be put into your 401(k) or a separate profit sharing account. Our vesting starting at 20% after the first year up to a full vesting at 6 years.

I've worked for a number of large corporations and each had some form of vesting schedule for the 401(k) matches...even when it was as low as 3%.

Moreover, if you don't like it, search for an organization to work for that provides better benefits.

Benefits are never guaranteed. Just ask the retirees at Kodak that are losing their retiree medical coverage.

[Deleted]

But, DH, I also gave you the example of Macy's, which was a straight 401k. It also had cliff vesting after 5 years.

And the pension gives no match, including no interest on your contributions, if you have to withdraw it because you didn't vest. And it was mandatory contributions at that, not discretionary like a 401k.

The point is that all of these places make their own rules, including those state pensions that people seem to envy so much.

[Deleted]

They make the rules, we can only play by them.

In my wife case, she was there 2 years and vesting was 3 years. So she "forfeited" the match

[Wisconsin Beth]

Nov 6, 2012 14:30:34 GMT -5 justme said:

How long is the contract they won for what you do? It's a pretty crappy vesting schedule in the gov't contractor world where people tend to move wherever the contract goes vs staying with the company.

Yeah, that's what I was wondering.

ETA - I see Dark answered.

I agree that it sucks, esp. since they're not likely to keep the contract. And unless you're going to argue it with Admin, you're basically stuck and screwed.

[Deleted]

Nov 6, 2012 14:29:24 GMT -5 ArchietheDragon said:

You are their bitch, Get used to it.

Basically

[andi9899]

I have worked at places where it's taken more than 5 years to vest.

Ours is straight forward, but the vesting is "cliff vesting" too. Dollar for dollar match up to 6% with an additional annual 6% contribution whether you contributed or not. 3 years to vest.

[Deleted]

And now you see the ways that they cut costs . . . .

Hello Virginia