Author Topic: 401k Company Match Conversion?  (Read 2064 times)

Gumbo1978

  • 5 O'Clock Shadow
  • *
  • Posts: 66
401k Company Match Conversion?
« on: June 23, 2015, 12:19:47 PM »
I'm pretty far removed from high school math so need some help figuring out my company's true match so I can compare to other companies.

My company matches 50 cents on the dollar up to the first 6%.  There is a complex formula based on company performance to determine how much in addition the company will match any given year.  For last year the company performance warranted an additional 18 cents on the dollar.  So my employer matched .68 cents for every dollar up to 6% of my contribution.

I'm looking at another company that does a straight dollar for dollar up to 5%.  This is easy math and easy to understand.  Can someone help me calculate the true company match I'm getting so I can compare it to the other company's match?

forummm

  • Walrus Stache
  • *******
  • Posts: 7396
  • Senior Mustachian
Re: 401k Company Match Conversion?
« Reply #1 on: June 23, 2015, 12:23:43 PM »
The amount of money you're talking here is so small it's not really worth considering very much. Whether the match is 3% or 5%, that's only 2% of your salary possibly. Is literally everything else about your offers, work environment, etc the same?

dandarc

  • Magnum Stache
  • ******
  • Posts: 3540
  • Age: 37
Re: 401k Company Match Conversion?
« Reply #2 on: June 23, 2015, 12:24:55 PM »
So your company matches 3% of your salary as a base plus the bonus.  Last year, you got a little over a 4% match -

0.68 (68 cents / 100 cents in a dollar) * 6% = 4.08%

mandy_2002

  • Bristles
  • ***
  • Posts: 292
Re: 401k Company Match Conversion?
« Reply #3 on: June 23, 2015, 12:27:26 PM »
The straight math is 3%, that's pretty easy.  If you're investing more than 6% already, then you don't need to worry about the 1% difference required at your current employer.  The "bonus" match is really up in the air.  This year, it was basically a 1% bonus (1.08% to be exact).  You may be able to use the last few years to see the variation on this.  As it stands this year, you're at about 4% for 6%.  To determine the percent that the extra cents add onto the 3% each year, multiply the added money by 6% (0.18 X 6% = 1.08% this year). 

Good luck!

MDM

  • Walrus Stache
  • *******
  • Posts: 9688
Re: 401k Company Match Conversion?
« Reply #4 on: June 23, 2015, 12:31:04 PM »
Assuming "percent" here means "percent of gross salary":

S = salary

Company 1: 0.68 * 0.06 * S = 0.0408 * S
Company 2: 1.00 * 0.05 * S = 0.0500 * S

If S = $50,000

Company 1 = $2,040
Company 2 = $2,500

Gumbo1978

  • 5 O'Clock Shadow
  • *
  • Posts: 66
Re: 401k Company Match Conversion?
« Reply #5 on: June 23, 2015, 06:34:58 PM »
Thanks everyone!  Not looking to move jobs but rather to try and influence my company to provide a match consistent with similar employers.  Really wish my retirement matching wasn't tied to company goals...bonus I understand.

MDM

  • Walrus Stache
  • *******
  • Posts: 9688
Re: 401k Company Match Conversion?
« Reply #6 on: June 23, 2015, 07:10:23 PM »
Thanks everyone!  Not looking to move jobs but rather to try and influence my company to provide a match consistent with similar employers.  Really wish my retirement matching wasn't tied to company goals...bonus I understand.

You might check http://www.bloomberg.com/news/2014-07-22/conocophillips-best-among-401-k-plans-with-facebook-last.html.  I think that was the original, and many sites (e.g., http://retirementsaving101.com/2015/01/03/who-has-the-best-and-worst-401k-plans/) reference it.

Also see
http://www.bloomberg.com/graphics/2015-401k/ and
http://www.bloomberg.com/visual-data/best-and-worst//best-401-k-plans-companies.

Good luck!