Thinking about job change but current job gives 9% salary into 401k..

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alpaca1
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Thinking about job change but current job gives 9% salary into 401k..

Post by alpaca1 » Tue Jul 17, 2018 10:23 pm

So just as the title states.. I'm considering going back to my old employer but one of the most amazing perks that this company offers is that I get 9% of my annual salary deposited into my 401k no matter if I contribute or not. HOWEVER, they unfortunately have very expensive John Hancock funds.

I'm positive that the other employer does not give nearly as much money.. or actually I don't even think they do a 401k match at all.

If the salaries were similar.. I have a feeling they'd offer me a tiny bit more to jump ship.. I wonder if it would be worth it.

Not sure.

Do any BH'ers have a similar experience?

Btw i am in a mid-career stage as a 35 yo male/single and own my home..

Thanks!


Edit: It is not a 9% match, it s a 9% total annual contribution based on my annual salary. Example: I make 100k, they put in $9000 on their dime.
Last edited by alpaca1 on Wed Jul 18, 2018 6:02 am, edited 1 time in total.

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whodidntante
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Re: Thinking about job change but current job gives 9% salary into 401k..

Post by whodidntante » Tue Jul 17, 2018 10:35 pm

Well, you should be maxing your 401k each year and getting the full match, so the marginal analysis is based on what the match is at the other employer. The 9% non-elective contribution might be more of a perk for a non-Boglehead, all of which do not save anything.

OnLevel
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Re: Thinking about job change but current job gives 9% salary into 401k..

Post by OnLevel » Tue Jul 17, 2018 11:24 pm

Get an offer, then compare (all, not just 401k) benefit packages from each employer side by side. You should be able to figure it out at that point. No point in speculating until you have an offer in hand.

aqan
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Re: Thinking about job change but current job gives 9% salary into 401k..

Post by aqan » Tue Jul 17, 2018 11:26 pm

You can always ask your new employer to match your current compensation. In many cases they will match or beat your current offer.

daveydoo
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Re: Thinking about job change but current job gives 9% salary into 401k..

Post by daveydoo » Wed Jul 18, 2018 12:47 am

whodidntante wrote:
Tue Jul 17, 2018 10:35 pm
...The 9% non-elective contribution might be more of a perk for a non-Boglehead, all of which do not save anything.
I think OP means that there is a "free" additional 9% "ER" contribution regardless of the "EE" contribution. Easy enough to factor that into the salary comparisons, imo. Potential new employer is likely to be impressed that you know and understand this since many of my colleagues have no idea that their employer is so generous.
"I mean, it's one banana, Michael...what could it cost? Ten dollars?"

InvestorThom
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Re: Thinking about job change but current job gives 9% salary into 401k..

Post by InvestorThom » Wed Jul 18, 2018 12:53 am

A lot of companies talk about “total rewards” — salary, bonus, stock, and benefits including 401k contributions and healthcare.

Figure out your current total rewards, everything you receive in exchange to doing great work. That is the base you use for comparison purposes. Some companies just want to talk salary and are squishy about other components of compensation but when you get in HR wants everyone to know about “total rewards.” So absolutely negotiate on your total compensation.

Why is the salary similar? Companies will pay 10-15% more for people to jump. If the company makes an offer that is close to what you’re making today and says something along the lines of, “I wish I could offer more” or “This is all we have in the budget,” they’re lying. It’s a negotiation. They will high five if they get you in for less than you want. And that next guy who comes, he’ll be making more.

A few tips...
- There is always more money... if they want you
- Learn the range of what you’re worth in the marketplace and start off with the high end
- Dont feel obligated to take the first offer. It’s the starting point — regardless of what they might tell you. Don’t be afraid to ask for more
- It’s always easier to get more when you’re coming in than once you’re in
- Call out your current employer’s generous 401k contributions. Dollarize it. Tell them that you will be losing $x in guaranteed 401k contributions because of the differences in the plans. It absolutely is part of your compensation and you expect to be made whole
- Don’t forget to include your next merit increase of promotional increase if they are imminent
- Don’t forget to consider any bonus or equity that you will behind when you jump ship
- Don’t be shy to asking about bonus payouts. Most are structured with targeted eligibility and payouts are based on company and individual multipliers. Ask them what the company multipliers have been for the last five years. You need to understand if that 25% is closer to 25% or 10%
- Don’t be a jerk in the negotiations. There will be some puts and takes. Maintain an upbeat attitude. “My head’s in two places. One side feels really good about this opportunity, great organization, challenges that fit well into my career growth and the team/my peers I’m really jazzed to be working with. The other side of my head says to take care of myself financially so that I’m focused on hitting the ground running and delivering quickly.”

And finally...

It’s not always about the money. This could be a stepping stone to something better. More challenging business problems that are interesting vs no win problems. Better peer group. Escape from a tyrant boss. Better commute. Stronger industry. A more solid company. But even if you’re solving for these don’t forget to take care of yourself financially.

alpaca1
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Re: Thinking about job change but current job gives 9% salary into 401k..

Post by alpaca1 » Wed Jul 18, 2018 5:59 am

Thanks for the responses everyone. There's a lot of good points made by you all and I think one of the key things I need to wait to see what the big picture for "Total compensation" is going to look like which includes everything put together.

Also, good point on using the current employer's 401k contributions and using that as leverage in the negotiating process.

alpaca1
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Re: Thinking about job change but current job gives 9% salary into 401k..

Post by alpaca1 » Wed Jul 18, 2018 6:00 am

daveydoo wrote:
Wed Jul 18, 2018 12:47 am
whodidntante wrote:
Tue Jul 17, 2018 10:35 pm
...The 9% non-elective contribution might be more of a perk for a non-Boglehead, all of which do not save anything.
I think OP means that there is a "free" additional 9% "ER" contribution regardless of the "EE" contribution. Easy enough to factor that into the salary comparisons, imo. Potential new employer is likely to be impressed that you know and understand this since many of my colleagues have no idea that their employer is so generous.
That is correct. It's 9% "free" whether I contribute or not. If I made 100k, they will put in 9000 on their dime.

alpaca1
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Re: Thinking about job change but current job gives 9% salary into 401k..

Post by alpaca1 » Wed Jul 18, 2018 6:03 am

Sorry, it is not a 9% match but instead a 9% annual contribution based off my salary. I've updated my original post to clear that up.

JuniorBH
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Re: Thinking about job change but current job gives 9% salary into 401k..

Post by JuniorBH » Wed Jul 18, 2018 8:38 am

I agree with what other posters have noted, which is that the whole picture needs to be considered to make an adequate comparison.

You should be maxing your 401K regardless (or at least up to the match at the new company), so you're not giving away 9% of your salary, it's something less (i.e. if new company matches 50% up to 6%, then they give you 3% and you're only losing 6%). Take that into consideration with the new offer; assuming other benefits are equal and your new salary is 15% higher, deduct the difference in 401K and that's the real change.

Said another way; while this is a great benefit, if new company offers the above noted 401K and a 15% raise, you still come out ahead, at which point non-financial factors may make the determination.

clutchied
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Re: Thinking about job change but current job gives 9% salary into 401k..

Post by clutchied » Wed Jul 18, 2018 9:26 am

that's a really great benefit! I'd have a hard time walking away from that in the midst of my accumulation stage unless there were significant upside at the other place.

njdealguy
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Re: Thinking about job change but current job gives 9% salary into 401k..

Post by njdealguy » Wed Jul 18, 2018 9:39 am

Wow nice, just wondering does your current employer give this 9% match for base salary only or including bonus? My employer does something similar where gives 7.5% regardless of what the employee contributes which is for base salary only. So if theres a base salary of 150k with a bonus of 50k, the employer match will be 150k * 7.5% and not 200k * 7.5%

HJG0989
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Re: Thinking about job change but current job gives 9% salary into 401k..

Post by HJG0989 » Wed Jul 18, 2018 9:39 am

OP,

Are the skills required more marketable at one company over the other? Keeping an eye on your career path is very important at your stage.

Just a thought to consider.

alpaca1
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Re: Thinking about job change but current job gives 9% salary into 401k..

Post by alpaca1 » Wed Jul 18, 2018 9:56 am

njdealguy wrote:
Wed Jul 18, 2018 9:39 am
Wow nice, just wondering does your current employer give this 9% match for base salary only or including bonus? My employer does something similar where gives 7.5% regardless of what the employee contributes which is for base salary only. So if theres a base salary of 150k with a bonus of 50k, the employer match will be 150k * 7.5% and not 200k * 7.5%
It's base only. Still amazing though! And ever since I've learned so much about personal finance and investing it's something very difficult to walk away from. Just off the bat and not counting money benefits:

The other places advantages:

- Much more laid back
- I've worked here before so i know a lot of the people
- I can go on any site I want. Almost everything is blocked here
- I can use my phone and don't have to keep it in the car
- They will give me a nice workstation/laptop that I can do as I please with
- Closer commute (10 minutes)
- "Unlimited" PTO (Not sure if this is a good or bad thing)
- Coffee that doesn't taste like battery acid
- There's beer in the fridge....

alpaca1
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Re: Thinking about job change but current job gives 9% salary into 401k..

Post by alpaca1 » Wed Jul 18, 2018 9:58 am

HJG0989 wrote:
Wed Jul 18, 2018 9:39 am
OP,

Are the skills required more marketable at one company over the other? Keeping an eye on your career path is very important at your stage.

Just a thought to consider.
I'm not entirely sure. I last worked there ~4 years ago so it may be that a lot of things have changed. This company that wants me back will definitely have me touching more things. I work in IT so instead of being kind of pigeon holed into one the smaller size makes people wear "more hats".

I do see your point though.

mrgeeze
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Re: Thinking about job change but current job gives 9% salary into 401k..

Post by mrgeeze » Wed Jul 18, 2018 10:07 am

alpaca1 wrote:
Tue Jul 17, 2018 10:23 pm
So just as the title states.. I'm considering going back to my old employer but one of the most amazing perks that this company offers is that I get 9% of my annual salary deposited into my 401k no matter if I contribute or not. HOWEVER, they unfortunately have very expensive John Hancock funds.

I'm positive that the other employer does not give nearly as much money.. or actually I don't even think they do a 401k match at all.

If the salaries were similar.. I have a feeling they'd offer me a tiny bit more to jump ship.. I wonder if it would be worth it.

Not sure.

Do any BH'ers have a similar experience?

Btw i am in a mid-career stage as a 35 yo male/single and own my home..

Thanks!


Edit: It is not a 9% match, it s a 9% total annual contribution based on my annual salary. Example: I make 100k, they put in $9000 on their dime.

Ultimately the match is just money. Nothing more.
"Amazing" is watching the sun come up on a sportfisherman on your way to the Gulf Stream.
But I digress..

Consider the $$. Just for math lets say 25% tax rate. So a 9 grand match on an IRA is worth about 11 grand in payroll.
If the other guy gives you 10-12 grand in salary you are indifferent. By that I mean its the same thing. Except you can spend it however you wish.

One might argue with an extra 12k you can pay the taxes and fund a Roth IRA with $9k.
That's actually better.
At your age you might be way ahead when its time to spend all that dough.

Assuming the other $$'s in the comp package are equal, simply tell the new (old) employer they are off by this much and see what he can do.
All you can do is ask. But you have to ask. Never assume they won't do something.

Don't over calculate.

TIAX
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Re: Thinking about job change but current job gives 9% salary into 401k..

Post by TIAX » Wed Jul 18, 2018 10:29 am

alpaca1 wrote:
Wed Jul 18, 2018 9:56 am
The other places advantages:

- Much more laid back
Reducing stress, assuming similar pay, is usually worth it.

JBTX
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Re: Thinking about job change but current job gives 9% salary into 401k..

Post by JBTX » Wed Jul 18, 2018 10:51 am

The 9% could be a non elective employer match, or it could be a profit share, or a combination of both. If circumstances change they could ultimately change either, although they would be less likely to change a non elective match than a profit share.

FreemanB
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Re: Thinking about job change but current job gives 9% salary into 401k..

Post by FreemanB » Wed Jul 18, 2018 11:33 am

I left my previous job about 6 months away from vesting in a small pension(After about 4.5 years). There was a slight bump in pay(Maybe 1-2%), roughly equivalent benefits, and about the same commute. However, my new job was challenging, interesting, and has much more potential for advancement. Overall, I'm much happier now then I had been for the previous few years at the old job. So if you have a non-monetary reason for changing jobs, don't let a few percentage points in 401k match stop you. Retirement is a good goal, but it shouldn't be the biggest factor in choosing your current job. So why do you want to change jobs?

N10sive
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Re: Thinking about job change but current job gives 9% salary into 401k..

Post by N10sive » Wed Jul 18, 2018 11:49 am

mrgeeze wrote:
Wed Jul 18, 2018 10:07 am
Consider the $$. Just for math lets say 25% tax rate. So a 9 grand match on an IRA is worth about 11 grand in payroll.
If the other guy gives you 10-12 grand in salary you are indifferent. By that I mean its the same thing. Except you can spend it however you wish.
While I agree that its just money and while total package should be considered more than just this match, it isn't this simple. If OP is contributing max to his 401k and he receives 9% annual contribution based on his salary given an example of 100k gross salary he is putting in 27k a year. Since the employer contribution is not counted in the individual employee contributions.

Id want a little more than just the tax rate difference in compensation although the other variables need to be factored in as well. Work/life balance is huge.

mrgeeze
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Re: Thinking about job change but current job gives 9% salary into 401k..

Post by mrgeeze » Wed Jul 18, 2018 7:57 pm

N10sive wrote:
Wed Jul 18, 2018 11:49 am
mrgeeze wrote:
Wed Jul 18, 2018 10:07 am
Consider the $$. Just for math lets say 25% tax rate. So a 9 grand match on an IRA is worth about 11 grand in payroll.
If the other guy gives you 10-12 grand in salary you are indifferent. By that I mean its the same thing. Except you can spend it however you wish.
While I agree that its just money and while total package should be considered more than just this match, it isn't this simple. If OP is contributing max to his 401k and he receives 9% annual contribution based on his salary given an example of 100k gross salary he is putting in 27k a year. Since the employer contribution is not counted in the individual employee contributions.

Id want a little more than just the tax rate difference in compensation although the other variables need to be factored in as well. Work/life balance is huge.
N10sive wrote:
Wed Jul 18, 2018 11:49 am
mrgeeze wrote:
Wed Jul 18, 2018 10:07 am
Consider the $$. Just for math lets say 25% tax rate. So a 9 grand match on an IRA is worth about 11 grand in payroll.
If the other guy gives you 10-12 grand in salary you are indifferent. By that I mean its the same thing. Except you can spend it however you wish.
While I agree that its just money and while total package should be considered more than just this match, it isn't this simple. If OP is contributing max to his 401k and he receives 9% annual contribution based on his salary given an example of 100k gross salary he is putting in 27k a year. Since the employer contribution is not counted in the individual employee contributions.

Id want a little more than just the tax rate difference in compensation although the other variables need to be factored in as well. Work/life balance is huge.
Was it Dick Van Patton or Sir William of Occam who opined we search for the simplest solution

The only $$$ at question are the employer match. What he decides to put away has no bearing on the amount put in by the employer (9% of salary).

Quality of life and what not might be far and away more important that a mere 10% bit of money.

But that's not this. This is something else... what i said it was. all that this is and nothing more.
sha-doo-bee. Shattered.

alpaca1
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Re: Thinking about job change but current job gives 9% salary into 401k..

Post by alpaca1 » Thu Jul 19, 2018 6:04 am

FreemanB wrote:
Wed Jul 18, 2018 11:33 am
I left my previous job about 6 months away from vesting in a small pension(After about 4.5 years). There was a slight bump in pay(Maybe 1-2%), roughly equivalent benefits, and about the same commute. However, my new job was challenging, interesting, and has much more potential for advancement. Overall, I'm much happier now then I had been for the previous few years at the old job. So if you have a non-monetary reason for changing jobs, don't let a few percentage points in 401k match stop you. Retirement is a good goal, but it shouldn't be the biggest factor in choosing your current job. So why do you want to change jobs?
Well for one, I'm getting a little bit bored with the project and I'm not liking the direction the project is taking from above. I know that if I moved, I'd probably get to do some new and interesting things but still I would guess that too would become boring eventually. The ONLY factor that keeps me here really is the retirement benefits. If not for that, I would've been able to find a job in my field where the pay is similar but the day to day life and work life balance is easier.

RickBoglehead
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Re: Thinking about job change but current job gives 9% salary into 401k..

Post by RickBoglehead » Thu Jul 19, 2018 6:34 am

Considering leaving a job for better coffee, unlimited web browsing, use of personal cell phone at work, beer in the fridge, etc. boggle my mind. Millennials...

IMO, those are so far down the list they aren't on it.

FreemanB
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Re: Thinking about job change but current job gives 9% salary into 401k..

Post by FreemanB » Thu Jul 19, 2018 7:04 am

alpaca1 wrote:
Thu Jul 19, 2018 6:04 am
Well for one, I'm getting a little bit bored with the project and I'm not liking the direction the project is taking from above. I know that if I moved, I'd probably get to do some new and interesting things but still I would guess that too would become boring eventually. The ONLY factor that keeps me here really is the retirement benefits. If not for that, I would've been able to find a job in my field where the pay is similar but the day to day life and work life balance is easier.
If the only thing keeping you there are the retirement benefits, then it is time to move on, particularly if you don't like where it is going.(I had a bad feeling at my last job too, and less than six months after I left, they laid off about 50% of the staff during a massive reorg) Another job might eventually get boring, or it might not. The only thing that sounds certain is how you feel about your current job. Don't let retirement plans dominate the decisions you make now. As long as you are diligently saving, the rest of the retirement details will work themselves out eventually. Aim for happiness both until you retire and afterwards. They don't have to be mutually exclusive.

nexesn
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Re: Thinking about job change but current job gives 9% salary into 401k..

Post by nexesn » Thu Jul 19, 2018 8:08 am

alpaca1 wrote:
Tue Jul 17, 2018 10:23 pm


Edit: It is not a 9% match, it s a 9% total annual contribution based on my annual salary. Example: I make 100k, they put in $9000 on their dime.
I will start with the caveat that every persons experiences will be different, but....

Earlier in my professional career I left a job that paid well and was super stable, with good yearly increases, for a job that paid 20% - 25% less in another state, where the cost of living was much higher. I was comfortable where I was but I was young, didn't have commitments, and wanted to experience other aspects of life. I considered it an investment in my life, and it turned out to be one of the best investments I've made so far. It actually took 4 years for my salary to equal what I left from. But, during that time, I met people who'd I'd not have met otherwise, formed bonds I'd not have gotten otherwise, learned and was challenged in the new job in ways I otherwise wouldn't have been challenged, and got many other things out of the change. I'm now happier (I hope :happy ) than if I'd stayed. Again, everyones experiences will differ, and not every choice works out. But, if you personally feel there are benefits of the move, sans the monetary, it might be worth listening to that other part of your brain.

As a good friend of mine liked to say "Life doesn't offer rematches".


Good luck with the decision.

P.S Fast forward many years later.... family is making a lot more money and we are doing great with retirement goals!

alpaca1
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Re: Thinking about job change but current job gives 9% salary into 401k..

Post by alpaca1 » Thu Jul 26, 2018 6:29 am

FreemanB wrote:
Thu Jul 19, 2018 7:04 am
alpaca1 wrote:
Thu Jul 19, 2018 6:04 am
Well for one, I'm getting a little bit bored with the project and I'm not liking the direction the project is taking from above. I know that if I moved, I'd probably get to do some new and interesting things but still I would guess that too would become boring eventually. The ONLY factor that keeps me here really is the retirement benefits. If not for that, I would've been able to find a job in my field where the pay is similar but the day to day life and work life balance is easier.
If the only thing keeping you there are the retirement benefits, then it is time to move on, particularly if you don't like where it is going.(I had a bad feeling at my last job too, and less than six months after I left, they laid off about 50% of the staff during a massive reorg) Another job might eventually get boring, or it might not. The only thing that sounds certain is how you feel about your current job. Don't let retirement plans dominate the decisions you make now. As long as you are diligently saving, the rest of the retirement details will work themselves out eventually. Aim for happiness both until you retire and afterwards. They don't have to be mutually exclusive.
Wow, you really dodged a bullet there. Yes you are right in that it's only the retirement benefits. I make it sound like there's a ton of small perks that I would leave for, but in all honesty I would not leave unless they offered me more money.

alpaca1
Posts: 62
Joined: Wed Jan 17, 2018 7:34 am

Re: Thinking about job change but current job gives 9% salary into 401k..

Post by alpaca1 » Fri Jul 27, 2018 9:19 am

InvestorThom wrote:
Wed Jul 18, 2018 12:53 am
A lot of companies talk about “total rewards” — salary, bonus, stock, and benefits including 401k contributions and healthcare.

Figure out your current total rewards, everything you receive in exchange to doing great work. That is the base you use for comparison purposes. Some companies just want to talk salary and are squishy about other components of compensation but when you get in HR wants everyone to know about “total rewards.” So absolutely negotiate on your total compensation.

Why is the salary similar? Companies will pay 10-15% more for people to jump. If the company makes an offer that is close to what you’re making today and says something along the lines of, “I wish I could offer more” or “This is all we have in the budget,” they’re lying. It’s a negotiation. They will high five if they get you in for less than you want. And that next guy who comes, he’ll be making more.

A few tips...
- There is always more money... if they want you
- Learn the range of what you’re worth in the marketplace and start off with the high end
- Dont feel obligated to take the first offer. It’s the starting point — regardless of what they might tell you. Don’t be afraid to ask for more
- It’s always easier to get more when you’re coming in than once you’re in
- Call out your current employer’s generous 401k contributions. Dollarize it. Tell them that you will be losing $x in guaranteed 401k contributions because of the differences in the plans. It absolutely is part of your compensation and you expect to be made whole
- Don’t forget to include your next merit increase of promotional increase if they are imminent
- Don’t forget to consider any bonus or equity that you will behind when you jump ship
- Don’t be shy to asking about bonus payouts. Most are structured with targeted eligibility and payouts are based on company and individual multipliers. Ask them what the company multipliers have been for the last five years. You need to understand if that 25% is closer to 25% or 10%
- Don’t be a jerk in the negotiations. There will be some puts and takes. Maintain an upbeat attitude. “My head’s in two places. One side feels really good about this opportunity, great organization, challenges that fit well into my career growth and the team/my peers I’m really jazzed to be working with. The other side of my head says to take care of myself financially so that I’m focused on hitting the ground running and delivering quickly.”

And finally...

It’s not always about the money. This could be a stepping stone to something better. More challenging business problems that are interesting vs no win problems. Better peer group. Escape from a tyrant boss. Better commute. Stronger industry. A more solid company. But even if you’re solving for these don’t forget to take care of yourself financially.
Thank you very much for this helpful post. I'm going to get on a call here in a few minutes with the HR of the company. I don't know why they need to talk to me to be honest but I'm guessing it'll be 5 minutes of initial chit chat about the position and then "What are you looking for in terms of salary?" which will be the meat of the call.

LawyersGunsAndMoney
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Re: Thinking about job change but current job gives 9% salary into 401k..

Post by LawyersGunsAndMoney » Fri Jul 27, 2018 9:34 am

Definitely consider the 401k contribution to be part of total compensation!

For the past 5 years my firm has had an 8% (of total comp) profit-sharing contribution to our 401ks and we definitely make the point to communicate it in the total comp package to current employees and new hires.

Would also look at what % is fully vested vs. subject to a schedule. A portion may be safe harbor and entirely yours from day 1, the other portion may be discretionary and subject to a vesting schedule.

FYI - depending on how your plan is structured, there is often a cap at $250k in total comp. Meaning, if you make more than that the percentage-match may only go up to that amount.

I sympathize with your having John Hancock as a 401k provider, they are IMO one of the worst. I lobbied for and made the switch recently to Fidelity after our AUM hit $1MM (small business) and while the transition was a bit of a pain, it was well worth it.

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