5 Tips to Maximize Your 401(k) Match

Some really excellent stats to help you rank your own 401(k), to see if you're getting shafted compared to what other companies are doing. It is interesting comparing the 401(k) to the ESOP (Employee Stock Ownership Plan). This will typically be structured in a private company. There are no stingy match formulas to monkey around with. The contributions are made for you, often equating to 20+ percent of your salary, and typically with a 6 year vesting period. Such companies tend to be very successful, and don't need to go public to raise capital.

Remember, over-investment in company stock such as Enron and WorldComm (WorldCon!) were 401(k) plans (they could not be ESOP's, because they were public companies). Cargill is a private agricultural commodities company that does not need public financing and yet is bigger than 98% of all Fortune 500 companies. Cargill is in 67 countries (founded in the U.S.), and yet remains a family owned business. Being "under-diversified" in a good business can be a good thing! Public companies are under more presure to perform no matter what the business cycle, hence they are more prone to fraud, cooking the books, or accounting irregularities.

http://www.ebri.org/ (Employee Benefit Research Institute) - for more information on similar research, alluded to above.

Original US News article referenced at: http://maximize401k.wordpress.com/

George Chadwick of MT 5:12AM September 06, 2009