3. The vesting schedule
“Vesting” is simply a fancy word for letting employees know when the money in their retirement plans is actually theirs to keep. Some companies require you to be employed for one or two years before they’ll allow employer contributions to vest, meaning if you leave the company within six months of starting, you’ll lose any amounts that your employer contributed to the plan. Many employers tend to allow money that you’ve contributed directly to vest completely and immediately, and often have stringent vesting of employer-contributed money. The best advice here is to simply know the schedule, and know what’s expected of you in order to keep the money that’s been earmarked for you. If you’re in line for sizable vested amounts by simply staying at the company for another few months, that needs to be included in any stay-or-go calculation.
4. Loan or withdrawal provisions
The sincere hope is that you’ll never have the need to dip into your retirement savings to fund current expenditures, but there are times — perhaps in the event of a global pandemic — that this may be necessary. Under coronavirus-related legislation, you’re able to borrow up to 100% of the plan balance or $100,000, whichever is less — but not all employers offer loan provisions. This is why it’s important to read the section on permitted loans, including details on potential penalties, interest charges, and the time you’ll have to repay the money. Taking from your 401(k) plan should be a last resort only utilized in dire emergencies, but it’s still important to know your employer-specific circumstances so you are at least aware of what you’re up against.