401k eligibility & employer contribution question

[jlt19]

I am fully aware that every company is different, but I'm looking for data points on what is typical.

DH started his job 9/2018 and was told he'd be eligible for the 401k after a year.

After his annual review, he was given the plan info with where to allocate the money. His situation is different in that his work automatically contributes 3% (not a match) plus profit sharing if they so choose. We decided to not contribute anything at this point b/c we aren't maxing out Roth's yet and the expense ratios are crazy high, IMO.

But, he just heard the dates from his company's "wealth manager". The plans are eligible on either 1/1 or 7/1 of the year following one year of service. So he isn't eligible until 1/1/2020. Ok, fine.

But, the employer contributions don't go in until the end of the following year. So nothing will go in until January of 2021. 

So, my questions are:
Is it typical to have to wait a year before being able to contribute to a 401k plan? 
With an employer contribution, do they typically do it in one lump sum or spread out?
I suppose in most cases it'd be a match, not an outright contribution, so if that's the case, do they do the match at the same time as your contribution or at one time?

Prior to this job we've only had a pension plan that is 100% employer funded, so this is brand new territory, but I have been looking at other jobs with 401k's so curious how they would work.

[Deleted]

Ugh. Mother humper. The board ate my entire response.

In summary, my current employer does a 6% base contribution regardless of employee contribution which is deposited in January for the prior year. They also do an employer match of $.50 on the dollar up to 6% which is also deposited as a lump sum in January. I'm sure that there is some sort of benefit for the employer to do it that way, but I don't know what that actual benefit is. Also, every job I've ever had I was eligible to contribute to my 401K immediately, so I don't know if that is industry specific, or I just lucked out, I'm not sure.

[carmenere]

H and I both get a match and non-match contribution. H's company calls it a pension and my org calls it a "years of service contribution" and both are deposited monthly at 3% of each paycheck. That's been the case at every job I've had. I personally haven't heard of lump some contributions but it may make sense depending on the company's cash flow throughout the year.

[ohgillian]

My former employer did a 5% contribution (not a match) and it was not a lump sum; it was a monthly contribution. That's the only part I can really speak to.

[dcn]

I used to audit retirement plans and all of that is common.

Matching contributions are typically made at the same time as employee contributions. Other non matching flat contributions vary. Profit sharing contributions are made annually, as that is when they know how much profit they have to share.

[sadlebred]

My company matches X% that goes in with each paycheck but not a lump sum. They have done a discretionary lump sum a couple of times, but we never know when it will be.

I've heard all sorts of answers about when employees are eligible to contribute to a 401K--a year, 6 months, etc. At my company from what I recall it's 60 days after hire, which has to do with getting the new employee set up in all of the HR systems, health care systems/enrollment, etc.

[Susie]

Employees of my firm are eligible to participate in 401k after 6 months.  The employer contribution is a match, and we do it biweekly at the same time as payroll.  

[kadams767]

My firm gives a safe-harbor contribution (not match) plus a discretionary profit sharing contribution. We do it lump sum in March or April for the prior year. However, we provide it for all employees who were employed at year-end, whether or not the employee was eligible to contribute on their own or not. So at my job, he'd get money for 2019 deposited in 2020.

[mokes]

At my company, you’re eligible on 1/1 or 7/1 after 6 months of service. I thought that was super long. (At my last job I think it was 90 days waiting period — same with all other benefits.) They spread out the match per paycheck.

For my H, I’m not sure what the waiting period is but they do a lump sum match in January. I always thought that was really weird but I’m just now realizing it’s probably for the year prior. I never really thought that much about it but that makes way more sense. 🙂

[tcu2003]

My company does a match and profit sharing. They deposit both in our 401k accounts in February or March the following year.

[sloan]

That seems super long to me BUT I realize a lot is industry dependent, and I worked in one where pensions were still existent just not as good as before, so companies would have a harder time recruiting against competitors if they didn’t allow 401 contributions for a whole year. Contributions to the pensions were sometimes a long wait, and always at least until Q1 of the following year, but in my experience 401(k)s always allowed full time employees to contribute their own money immediately and most matched immediately (one matched on your one year anniversary for the prior year and each paycheck after that) but took a few years to vest (one had no vesting time for 401, only pension).

[trissie18]

My employer does a 10% contribution (no match required) with quarterly deposits. New employees are not eligible to enroll in the 401K plan until 1/1 or 7/1 following one year of service. (i.e., If their start date is 6/30 then they would be eligible 7/1 of same year, if their start date is 7/2 then they would be eligible 1/1 of the following year.)

[brooke77]

It really varies.

My first company had no 401k option.
My second you could contribute on day 1. Company match of .25 cent on the $, up to 3%. It vested after 5 years.
My third company you could contribute in day 1. No match.
My current company you can contribute on the first of the month after 30 days of employment. Company match of 25%. Vests 20% each year. (So fully after 5)

I’m finding that in my industry and salary range, a 401k match is very rare so I’m very happy with my current company!

ETA: any company with a match was per contribution. So if I contributed $500 that paycheck, the company would contribute $25 that paycheck.

[sillygoosegirl]

I've never had to wait to contribute myself to a 401k. That seems like it would really discourage participation at minimal savings to the company. A former employer of mine did a "match" that was deposited in like March of the year following when you earned it. And you lost it if you quit before then. Which sucked for me, because I did. My current employer does a match throughout the year, and then lump sum profit sharing to 401ks later on as well. I find that less annoying as I don't count on it as part of my compensation (although they've actually been very consistent at making that payout every year).

[hbomdiggity]

my previous law firm did not provide employer contributions to attorneys (they may have for staff).

my current company provides 6% match plus profit sharing. It will prob take me about 3 years to save what had at the law firm after 9 years.