Starting a New Job? Ask These Three 401(k) Questions

Thinking about setting up a 401(k) for your future retirement needs can feel daunting, especially will all the other pressures that come with starting a new job - pleasing your new boss, learning the “politics” of the workplace, and perhaps you’ve purchased a new home in your new city.  

All these worries can quickly put your 401(k) on the back burner.

I wanted to share with you three pointers that will help you get your 401(k) plan moving. It’s important to highlight these because if you’re anything like me, before tackling something big it helps to start with some small tasks to provide a little momentum.

Your overall priority pertaining to your 401(k) should be to talk with your HR department or hiring manager to get details of your company’s 401(k) plan. They are the gatekeepers for anyone getting into the plan and will likely have a bunch of helpful, plan-specific information for you to review.  

There are a few questions you’ll want to ask them right from the start. It shouldn’t be more than a 15 minute conversation but will save you precious 401(k) setup time.

Who is your 401(k) Plan Administrator?  

This is the company that actually facilitates the 401(k) plan for your employer. Fidelity, Vanguard, and Charles Schwab are a few of the big 401(k) names out there, but there are a lot of smaller companies as well. When you open your 401(k) account, you will be opening it with your Plan Administrator, meaning they are the ones who will have custody of your 401(k) account.

Finding this out ahead of time can provide you some extra time to explore their website and other online resources about how your Plan Administrator manages your company 401(k) plan and what tools might be available for your use.

How soon are you eligible to participate?  

Some companies wait a certain period of time before allowing you to open a 401(k).  30-90 days is not uncommon. Ask what this time period is before you dive into the process.  

Hopefully your company will not require a waiting period. If they do and you’re itching to contribute to your retirement accounts, you could look into contributing to a Traditional or Roth IRA while you await 401(k) eligibility, or just set the money aside in a checking or savings account until you’re eligible.

How soon is your company match vested?  

The “free money” match of many 401(k) plans is incredibly valuable, however, there may be a vesting period. This means that some of your matched funds won’t be available if you try to withdraw them until a certain period of time. Ask your employer what their vesting period is.  If you ever leave an employer after a short time you may not be able to bring the total amount of your match with you.

I’m confident these questions will lead to a fruitful conversation with your manager or HR group.  

You may also find that they give you the confidence to get enrolled in your 401(k) plan sooner than later so you can put your money to work towards retirement.