Can't contribute to 401k until 1 year of employment???

[MrGville]

Anyone heard of this?  My wife just got a job offer, and she has been investigating the benefits.  They said you aren't eligible for the 401k until you've been employed with the company for 1 year.  We assumed this meant that you wouldn't get the company match until 1 year of employment, but they clarified that you can't contribute your own money until 1 year.  Seems odd to me.

[slappy]

Yes I have heard of this. Luckily I have not encountered it in my own employment. I really think it sets people up for failure.

[Frankies Girl]

Nope. Not odd to have a waiting period of 6 months to a year before allowing retirement plan enrollment. Vesting in the matches is also pretty common (my last company you had to stay 5 years before you were 100% vested in the employer contributions). Can discuss/try to negotiate, but in general it's pretty common.

[GnomeErcy]

Yep definitely experienced this. One of my previous companies was twice a year (July 1 and Jan 1) depending on your start day. So if you started Jan 3, you couldn't contribute till July 1.

They also ran other benefits this way and did all of their raises and stock awards based off that too.

My old boss was a temp first back like 24 years ago and started in December. Got hired full time Jan 3 of whatever year. The CFO, who started around the same time as him, always puts together a personalized "This is how much money the company screwed you out of by not back-dating your hire date to Dec 31" statement at the end of every year. 6 months of 401k vesting, a year (compounded) of bonuses, stock awards/options, raises...

[thedigitalone]

My company has the 12-month waiting period as well.  It is because outside of the home office it is mainly hospitably workers that tend to change jobs frequently. The 12 month delay reduces the number of accounts from short timers, I assume that makes administration easier.

At 12 months they auto-opt in though, so that's good.

[mozar]

My company is the same. I started in August. My company allows people to join their 401k July 1st and Jan 1st. I won't have been there a year next July 1. So i can't join until jan 1 2018. This will cost me about 6000 dollars. I figured it was because they didn't want to pay the fees. I could offer to pay the fees because they will probably be less than 6k. But god forbid I ask them to do extra work.