When I logged into my 401K account recently I got a fun surprise. After five years working at my current employer, I am officially fully vested in the employer contributions to my 401K. (For those not familiar, this means that the matching funds my employer has been putting in for the last 5 years are officially all mine and can’t be clawed back if I leave the company.)
With this good news, I was excited and wanted to show off to Mr PoP, so I checked his to make sure I had my bragging stats correct. But what did I find? He is ALSO 100% vested in his 401K! Wow!
So What Does This Mean?
1. We’re old. Seriously, I remember both Mr PoP and I job hopping around the first couple of years after graduating school. And now I’ve been at a job for 5 years?!? That means I’ve been “in the work force” for 7.5 years. OMG I FEEL ANCIENT!
2. Perhaps less negotiating if we switch jobs. In the past, I looked at unvested matching funds from my current employer as something a new employer would have to match in terms of a raise or sign-on bonus. I find it’s much easier to imagine myself saying to a prospective employer, “Since I’m giving up this much money to switch, I would like you to replace it” rather than “I want a crap load more money and I have no rationale other than my general awesomeness of which you are clearly already aware since you have made me an employment offer.”
3. Switching jobs could provide some benefit! While our 401K fees aren’t insane (personal capital shows ours as lower than the average), 401Ks tend to have fairly high fee ratios in comparison to our low-cost Vanguard Roth IRAs. So a job switch would trigger a roll-over from the prior employer’s high fee 401K environment to a low-fee IRA, probably at Vanguard. But that benefit might be offset by starting over with a new vesting schedule at a new employer.
And You Get To Impress Friends
Several years ago (over gChat, so it was saved for posterity), one of my good friends J had marveled at my two-year anniversary with my current employer. She said, “OMG [Mrs PoP], you finally managed to not get bored with a job after 15 months! This can’t possibly last much longer, can it?”
So when I hit five years I had to share the good news (via gchat, of course):
Mrs PoP: I have crazy news!
J: how crazy? good crazy?
Mrs: yes, good crazy. I have officially been working at my job for more than 5 years and am fully vested in my 401K. you never thought this day would come, did you?
J: congrats! (and no, I didn’t really think it would.) But for a moment there you did have me worried that you were pregnant.
Mrs: haha, nope.
All in all, being 100% vested in our 401Ks doesn’t feel as earth-shatteringly awesome as I was hoping for, but it still feels like an old fashioned feather in our (now officially older) financial caps. So yay.
Mr. PoP Notes – I have some mixed feelings about this whole “getting old” thing. On the one hand, I’m becoming more wealthy and happy; on the other hand I’m in severe danger of getting socks and a tie for my next birthday. Its a mixed bag really, but being vested seems a little bit like getting your mortgage paid off-you thought you owned something (house/ entire 401k) but but really it was on semi-permanent loan until you finish paying your dues.
Have you vested in your 401K? Did it have any impact on your job or investment plans?