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Author: jjm1970 Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 734615  
Subject: Re: 401-k- different approach (OT) Date: 2/20/2001 5:42 PM
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I have always wondered why some employers only offer those "bad" plans when a "good" one doesn't cost them anything more.

Actually, in this case it DOES cost them. If one of the employers reasons for offering a 401(k) plan is for the retention of employees, then it behooves the employer to stretch out the vesting of company contributions.

If an employee leaves before the company contributions are vested, the company gets that money back. That's a cost savings.

Employers usually offer benefits to attract and retain employees. Anything that's enhances that is considered a benefit to the plan from the employer's point of view.

I'm sure there are companies who feel the opposite - they only want "entry-level" personnel so immediate vesting costs them nothing, and actually encourages people to move on before getting any higher on the pay scale.

It depends on the goals of the company involved. If they would rather hire new people, or if their training costs are high enough that they prefer to hang on to them for a while.

Jim
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