Take slightly better job if you had to wait 1 year for 401k?

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bogler1029
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Take slightly better job if you had to wait 1 year for 401k?

Post by bogler1029 »

What are your thoughts on taking a job that pays only a few thousand more if it meant waiting a year before you can enroll in the new company's 401k? How about one with equal pay, but more room for growth?
montanagirl
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Re: Take slightly better job if you had to wait 1 year for 4

Post by montanagirl »

I wouldn't sweat the lack of a t 401k. I'd just max out my IRA instead, Roth or trad either one. Then there is still after-tax saving too. But if you're higher income than I was, you probably won't have as much tax advantaged space but it's only for a year.

I guess if your current employer gives a match, then that is a loss.
yosef
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Re: Take slightly better job if you had to wait 1 year for 4

Post by yosef »

I wouldn't let it stop me from making a move I wanted to make.
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TX_TURTLE
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Re: Take slightly better job if you had to wait 1 year for 4

Post by TX_TURTLE »

Room for growth is valuable, and IMO it would be worth it. However, many things can be negotiated. Have you tried asking for an exemption from the waiting period? When switching company you are taking a risk. You should get something in return.
downshiftme
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Re: Take slightly better job if you had to wait 1 year for 4

Post by downshiftme »

Regardless of the 401k situation, I doubt I would take a new job that only offered a few thousand more in compensation unless there was some other significant reason to do so. Since I will likely only change jobs a few times in my career, I would want each change to be a meaningful improvement.
Beth*
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Re: Take slightly better job if you had to wait 1 year for 4

Post by Beth* »

I would not make a decision based upon this. Take the job that you think will be best for you. Those of us who are employed full-time spend a large number of our hours working. I have had jobs where I was bored to death and jobs where the level of stress made me miserable and negatively impacted my health and my relationship with my family. No amount of money is worth tolerating either of those conditions unless you have absolutely no other alternative.

For me, a couple thousand dollars in pay or waiting one year to access a 401k would only be a deciding factor if I thought that two jobs were an equally good fit for me. My personal feeling about money is that most of us need a certain amount of money so that we can save and so that worrying about having enough money does not become a negative factor in our lives. Once you reach that point, quality of life takes precedence over earning more.
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nisiprius
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Re: Take slightly better job if you had to wait 1 year for 4

Post by nisiprius »

Beth* wrote:....I would not make a decision based upon this. Take the job that you think will be best for you. Those of us who are employed full-time spend a large number of our hours working. I have had jobs where I was bored to death and jobs where the level of stress made me miserable and negatively impacted my health and my relationship with my family. No amount of money is worth tolerating either of those conditions unless you have absolutely no other alternative....
Indeed. I saw the thread title and assumed the "slightly better job" was going to mean "slightly better job," not "slightly higher-paying job."
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
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Steelersfan
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Re: Take slightly better job if you had to wait 1 year for 4

Post by Steelersfan »

Take (or keep) the job that gives you the most satisfaction and has the best future for growth.

The 401k is just noise.
investor1
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Re: Take slightly better job if you had to wait 1 year for 4

Post by investor1 »

If you think you'll be happier, do it.

You can save money in an IRA and a taxable account, etc. Not having a 401k doesn't mean you can't save money.
livesoft
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Re: Take slightly better job if you had to wait 1 year for 4

Post by livesoft »

Negotiate a better signing bonus because of the delayed entry into a 401(k).
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Angst
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Re: Take slightly better job if you had to wait 1 year for 4

Post by Angst »

livesoft wrote:Negotiate a better signing bonus because of the delayed entry into a 401(k).
+1

Moreover, I'd be more interested in the quality of the investment options than the 1 year delay. Perhaps they're simply comparable to your current employer.
Saving$
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Re: Take slightly better job if you had to wait 1 year for 4

Post by Saving$ »

I had this one time, and it turned out the waiting period was for employer match. It was no problem for them to let me participate in the 401k with my own funds the quarter after I started. I just put HUGE amounts of each paycheck into the 401k in that quarter so that I could reach the max for that calendar year.
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Watty
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Re: Take slightly better job if you had to wait 1 year for 4

Post by Watty »

Steelersfan wrote:Take (or keep) the job that gives you the most satisfaction and has the best future for growth.

The 401k is just noise.

+1

If you can't make 401k contributions from say October of 2014 to September of 2015 then you would would still have October to December of 2015 to load up the 2015 contributions. This would of course take some budgeting to make large contributions for the last three month of the year and might affect any employer match but it is likely a secondary consideration.
cherijoh
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Re: Take slightly better job if you had to wait 1 year for 4

Post by cherijoh »

TX_TURTLE wrote:Room for growth is valuable, and IMO it would be worth it. However, many things can be negotiated. Have you tried asking for an exemption from the waiting period? When switching company you are taking a risk. You should get something in return.
Stuff like the waiting period is usually written into the plan documents, so it is unlikely that they will make an exception. It seems odd that you would have to wait a year to enroll in the 401k plan. Waiting periods are more likely for matching to kick in. Is it a small company? Then a waiting period might make sense since there are higher per-person set up costs. If you are going to lose $x dollars in matching funds due to the wait, you might have better luck in negotiating a signing bonus. A friend who switched jobs and wasn't able to immediately enroll in the new firm's medical plan was able to negotiate a bonus equal to the amount she would have to pay in COBRA coverage for the gap period.
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tractorguy
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Re: Take slightly better job if you had to wait 1 year for 4

Post by tractorguy »

My answer to your question has two parts.
1) +1 on negotiating a signing bonus to cover the shortfall. I'd go for a higher salary first, then try for a hiring bonus if the salary increase gets turned down. The person who is hiring you or his immediate supervisor probably have authority to grant either of these up to some limit. Getting early entry into the 401K would probably require high level authority from the HR department if you can get it at all. Its always best to try to negotiate with one person rather than a bureaucracy.
2) I would never advise anyone to change jobs if its only "slightly" better. A new job entails lots of risks. You can be misjudging the work, they may be misrepresenting it, you end up being unable to work with the new boss or co-workers, the commute is horrible, etc. My SIL has worked 5 places in 8 years and hated over half of them because he didn't understand what he was getting into. I would be looking for a minimum of 10% pay raise or a quality of life improvement that was way more than "slight" or both.
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Re: Take slightly better job if you had to wait 1 year for 4

Post by noco-hawkeye »

+1 to everyone who says to go ahead and make the move.

I recently changed companies, and have a waiting period for 401k contributions as well as a contribution max for high income earners. Although I will be stuck with lower 401k contributions, I'm glad I made the move and will work around this.

Finding a job that you like is really worth quite a bit imho. It's kind of like a salary multiplier to me, or maybe a bad job is like a salary reduction factor. You never know if you will even make it to retirement - make the most of now. My $.02.

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Zabar
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Re: Take slightly better job if you had to wait 1 year for 4

Post by Zabar »

livesoft wrote:Negotiate a better signing bonus because of the delayed entry into a 401(k).
+2 In the last job I had, I was ineligible to receive the employer match for the first six months. I said that this was a problem since I was giving up a job in which I was already getting employer matches. They agreed to give me a bonus at the end of the calendar year equal to what their match would have been.
freddie
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Re: Take slightly better job if you had to wait 1 year for 4

Post by freddie »

bogler1029 wrote:What are your thoughts on taking a job that pays only a few thousand more if it meant waiting a year before you can enroll in the new company's 401k? How about one with equal pay, but more room for growth?
What is the cost of having to wait one year? I assume you would max out 2014 in your old plan and 2015 in the new plan (assuming they let you join after you have 1 year of service. If they make you wait til the start of the next year the math is a bit different). You missing out on a few thousand of employee match at worst. Personally I would never consider a job with any type of waiting limit (401(k), medical,...) but I am told they are pretty standard in some industries. If figure if a company isn't willing to take a couple thousand dollar max risk on me, I sure as heck don't want to risk my time on them.
ERISA Stone
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Re: Take slightly better job if you had to wait 1 year for 4

Post by ERISA Stone »

cherijoh wrote:
TX_TURTLE wrote:Room for growth is valuable, and IMO it would be worth it. However, many things can be negotiated. Have you tried asking for an exemption from the waiting period? When switching company you are taking a risk. You should get something in return.
Stuff like the waiting period is usually written into the plan documents, so it is unlikely that they will make an exception. It seems odd that you would have to wait a year to enroll in the 401k plan. Waiting periods are more likely for matching to kick in. Is it a small company? Then a waiting period might make sense since there are higher per-person set up costs. If you are going to lose $x dollars in matching funds due to the wait, you might have better luck in negotiating a signing bonus. A friend who switched jobs and wasn't able to immediately enroll in the new firm's medical plan was able to negotiate a bonus equal to the amount she would have to pay in COBRA coverage for the gap period.
If a plan is top heavy, even if the participant is only eligible for the 401k contribution and not yet eligible for match and/or profit sharing, he must receive the top heavy minimum (an employer contribution, usually 3%). This is generally the reason I would advise a client not to have different entry requirements for each source.
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bogler1029
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Re: Take slightly better job if you had to wait 1 year for 4

Post by bogler1029 »

The impression I've gotten is that most people wouldn't do it simply for the slight increase in pay, but rather decide based on the work environment. In this situation I feel that staying at my current job would make me happier, since it's stress-free and I'm well-respected here. However my salary is only 45k and there is no room for growth here. It's a tough call.

I appreciate the input.
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