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After being with my company for over a year, I'm at last eligible to join their 401K scheme. What's the catch? My employer won't contribute to it until I'm here for another year and then they'll only contribute 25% (You actually have to work here for 5 years before they match 100% and I don't intend to stay here for 5 years.)

I should also mention that the 401K scheme doesn't even offer index funds.

SOOO....is it worth joining now or should I just continue contributing to my Roth IRA?

MM
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In general;

1)Get your employer match. Check to see it rally starts on your anniversary, not the next January 1st. Also check the vesting schedule but people sometimes end up staying in a position longer than they think they will.
2)Max out Roth
3)Max out 401k or deductible traditional IRA.

Greg
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After being with my company for over a year, I'm at last eligible to join their 401K scheme. What's the catch? My employer won't contribute to it until I'm here for another year and then they'll only contribute 25% (You actually have to work here for 5 years before they match 100% and I don't intend to stay here for 5 years). I should also mention that the 401K scheme doesn't even offer index funds.

Is that 25% of your contribution or 25% of your paycheck? Either way seems more generous than average once your 2 year waiting period is over. Many 401k plans do not provide index funds, so your next best bet is to analyze the funds they do offer and pick the best ones for you.

My recommendation would be to figure out your annual retirement contribution target, and figure how much you need monthly to fill out your Roth and and put the rest into the 401k.

Fuskie
Who always promises to offer unprofessional advice...
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Is that 25% of your contribution or 25% of your paycheck?

My employer will match 25% of my contribution.

Thanks for your advice. I guess I will sign up for the 401K.
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I would suggest you max out the 401K contribution. The money probably can be invested in an equity fund even if there is no index fund option.

My guess is you are at least 30 years from retirement. That is a long time and you can take the stock market risks over that period. If you happen to be very, very bright and really know the stock market will be down over the period from now until you expect to leave, then go for a money market. (You might also get very rich selling your ability to predict the stock market.)

Generally speaking, fewer and fewer jobs have traditional defined benifit pension plans or for that matter any pension plan. Social security is going to need more money then the working people will want to pay. So the bottom line is most people today will be retiring on their own savings - kind of like it was back in the early part of the 20th Century!

Gordon
Atlanta
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