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The law on cliff vesting 401k matches is that it has to happen in three years. If it were tied to your start date, then everyone would have to wait exactly thre
by giaour 11y ago
The law on cliff vesting 401k matches is that it has to happen in three years. If it were tied to your start date, then everyone would have to wait exactly three years. Since it's tied to calendar years, you only have to wait the full three if you start on January 1st. Even if you start on January 3rd, you come out a couple days ahead.
- delecti 11y agoActually the way to maximize the time it takes to vest your 401k is to start just late enough in the year that you can't accumulate 1000 hours. Around mid-late July, if I remember correctly from the math I did when trying to figure this out for myself.
- giaour 11y agoOuch. Good thing I started in June.
- madcaptenor 11y agoAssuming 40-hour weeks and that you get credit for "work" on holidays (I don't know how long people are working, but if we're talking exempt employees the calculation is probably based on a 40-hour week), you'd maximize that by starting 25 weeks from the end of the year. The 175th-to-last day of the year is July 10. So, yes, mid-July is the worst possible time to start from a 401k point of view.
- jsolson 11y agoI did not know that. So the options are either 100% vested at match time (which is what I have now) or a three-year cliff? In that case I suppose you could argue Amazon is just trying for the most liberal interpretation of the law; bully for them. Except of course that the other option was to ditch the cliff entirely and give people their 401k match from the get go.
- giaour 11y agoYeah, they could just vest employer contributions immediately. That's pretty rare in my experience but not w/o precedent. One other option I've seen is incremental vesting of 20% year over year. You only have to vest in three years if you do it all at once; otherwise you can take up to five years.