Author Topic: should i utilize my company's 401k?  (Read 1648 times)

Cheddar Bob

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should i utilize my company's 401k?
« on: December 20, 2016, 06:29:20 PM »
Just started a new job and have been looking over the details of the 401k plan.  Was hoping to get some guidance on whether you think it's worth it to invest.

The plan is through Ascensus (never heard of them before).  There are a lot of options, but there is only one option that is close to an index fund - the Vanguard 500 Index Fund Admiral Class (expense ratio 0.05%).  Just about every other fund has an expense ratio north of 0.60%.  My previous company used Vanguard and I put all my money in the Total Stock Market fund, so I'm disappointed to see that there is only one option for Vanguard or a broad index fund.

As far as matching goes, there technically is none.  But the company will contribute a certain percentage at the end of each year that is based on company performance and my salary.  I'd estimate that this would be $9,000 for my first year.  This amount would vest ratably over 5 years. 

Do you think this is still worth pursuing?

Edit: Few things I should add.  I have no debt and am very much of the MMM mindset when it comes to living expenses.  I'm thinking that it still makes sense to invest int he 401k for the tax deferrals and the company contributions (even if I don't stay 5 years, that amount is actually way more than my previous job), but just wanted to see if people had other perspectives.
« Last Edit: December 20, 2016, 07:03:59 PM by Cheddar Bob »

Ocinfo

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Re: should i utilize my company's 401k?
« Reply #1 on: December 20, 2016, 06:35:09 PM »
I would unless you have some high interest student or auto loans (6%+). The Vanguad S&P 500 fund gets plenty of diversity and you can always add some mid, small, or international ETFs into your other accounts so on a whole you have the allocation you want.

kpd905

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Re: should i utilize my company's 401k?
« Reply #2 on: December 20, 2016, 07:02:15 PM »
Yes, .05% is great.  And it isn't just close to an index fund, it is an index fund.

FiguringItOut

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Re: should i utilize my company's 401k?
« Reply #3 on: December 20, 2016, 09:42:47 PM »
I have a portion of both my tIRA and Roth IRA invested in this index fund (Vanguard 500 Index Fund Admiral Class).

It's done really well this year.  It have bigger swings than Total Market fund, but that's because its shares cost more, so there are fewer shares for the same amount invested and thus the same % decrease/increase swings more.

I wish I had it as an option in my current 401K.  The only fund which I was able to find and invest in is MW 500 something or other with 0.5 expense ratio.

OneCoolCat

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Re: should i utilize my company's 401k?
« Reply #4 on: December 20, 2016, 09:47:58 PM »
Sounds like an incredible 401k.  Of course you should utilize it! 

Spork

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Re: should i utilize my company's 401k?
« Reply #5 on: December 20, 2016, 09:54:13 PM »
Assuming you'd get $9k a year that is tax deferred and invested in VFIAX: I'd absolutely take that.

I have no earthly idea what your salary was, but assuming a semi-normal 3% match... $9000 is a 3% match of $300k.  It doesn't sound bad at all.  You're either earning pretty big... or their match is pretty big.  Either option is a good one. ;)

And VFINX is a fine index fund.  No, it isn't total market, but it's the top 500.  It's pretty solid.  We own some and have never been sorry about owning it.

Cheddar Bob

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Re: should i utilize my company's 401k?
« Reply #6 on: December 21, 2016, 05:26:16 AM »
Thanks for all the responses.  Sounds like I should go with it.

Unfortunately, I am not making $300k lol.  The company contribution (it isn't really a match...) is really good then I guess.