- What are defined contribution plans?
- How do defined contribution plans work?
- How does the money get invested?
- What tax benefits do 401(k)s offer?
- Do I have to contribute to my plan?
- Why is a 401(k) such a good deal?
- When do I pay tax on a 401(k)?
- How is a Roth 401(k) different?
- What is a matching contribution?
- How does vesting work exactly?
- How much should I contribute to my plan?
- What if I can't invest the maximum right now?
- What if I need the money before I retire?
- What if I leave my job?
Any money you contribute from your paycheck is always 100% yours. But company matching funds usually vest over time - typically either 25% or 33% a year, or all at once after three or four years. Once you're fully vested, you can take the entire company match with you when you part ways with your job. If you're not fully vested, you'll get to keep only a portion of the match or maybe none at all. To find out your vesting schedule, check with your company's benefits administrator.
The upshot: It can usually take around three to five years before you own all of your company matching contributions. Leave your job before then, and you'll lose some of that delightful free money - even if you're laid off.
