No. of Recommendations: 0
Greetings, dozer183e, and welcome. You wrote:

<<My Company currenlty has a 401(k) plan. It is just a straight plan with no matching. My boss recently asked my if there is anything I would like to see changed in it. Of course, I told him I would like some form of employer matching benefit. I noticed a bit of reluctance on his part. I think I convinced him of the long term benefits for himself as well as the employees. One problem the company has had is a high turnaover rate. We are a small company (10-12 people) and it really hurts when people leave after only 2-3 years. I explained how vesting after 5 years will probably keep people around longer.

What else should I tell him? What vesting schedule is best? >>


What's more expensive to him as the owner, losing employees after a year or two or making a matching contribution? The latter are not cheap for a small employer to make, which is why many do not.

As to a vesting schedule, there are basically two schedules an employer may use. In cliff vesting, the matching contribution does not become vested at all until the employee enters the fifth year of service, then it is 100% vested. Alternatively, the employer may use seven-year vesting in which the matching contribution does not vest for the first two years, but the employee then vests at 20% in the third year, 40% in the fourth year, 60% in the fifth year, 80% in the sixth year, and 100% vesting in the seventh year. The employer may choose a faster vesting schedule if desired.

Regards..Pixy
Print the post  

Announcements

The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement