By Walter Updegrave, Money Magazine senior editor September 25, 2008
Question: My company’s 401(k) vesting period is longer than I plan to stay at my job. Should I still invest in my 401(k) knowing that I will not receive any employer matching?
– Andrew, West Palm Beach, Florida
Answer: The short one is, Yes, you should still contribute to your 401(k) account even if there’s the chance that you may not get your employer’s matching funds.
But before I get into the reasons why, I want to make sure you and other people in your situation understand a bit about the ins and outs of vesting, which refers to the portion of your 401(k) that you actually own at any given time and that you get to take with you if you leave the company.
To begin with, I want to be perfectly clear that you are always 100% vested in all of the contributions you make to your 401(k), as well as all the investment earnings your contributions generate. That money is yours no matter what. Vesting requirements affect only the money your employer kicks in, as well as the investment earnings stemming from employer contributions.
You should also know that employers have some latitude in how quickly you vest. According to a 2007 survey by Hewitt Associates, about 44%…
