401(k) Eligibility

reh

Currenlty our plan states that an employee cannot participate (employee deferral and employer match) in our 401(k) until after one year of employment. We are considering changing to 90 days of employment for employee deferral and 1 year of employment for the employer match. I am really just interested in the pros/cons of doing this or what other companies have in place for their eligibility requirements. Thanks.

HRCalico

Our 401(k) and profit sharing have the same eligibility requirements:

Employees are eligible after their six month anniversary. However, we only enroll on calendar quarters (1/1, 4/1, 7/1, and 10/1). Our match starts right away, but we have a vesting schedule for the employer match and profit sharing - 1 yr 0%, 2 yrs 25%, 3 yrs 50%, 4 yrs 75%, 5 yrs 100%.

This way, their match accumulates, but protects us a little, too.

mrbill

I feel that 90 days and 1 year for the match is the right mix. In past life, we had it immediately on the next qualification date, which meant that we could hire an employee on September 30, and they would have to make a decision for October 1. I felt that this was placing too much of an immediate decision need on the new hire. After 90 days suits me fine.