Should I give up the company match?

[Eleena de Lisser]

My employer offers a generous retirement plan: 4% company contribution (regardless of whether or not employee contributes) PLUS a 5% company match. In other words, a total of 9% from the employer if the employee contributes 5%. All of this would be in pre-tax dollars.

My question to the BP forum is this: Would you stop contributing pre-tax dollars to your retirement plan (and give up the 5% company match) to open and fund a Roth? Stopping your contributions to the company's conventional 401k would be a temporary move. Just long enough to put the $5,500 in the Roth annually. I like the idea of having a Roth SDIRA for real estate investing.

Your thoughts?

[Duncan Taylor]

Over the term of your financial life you will see a difference in what you have available for retirement if you decline the company match. That difference will compound and will be huge if you are relatively young (you look like you are) and you decline it for any significant amount of time. You are talking about a swing of 10% of your compensation, income tax deferred, so you can contribute to a ROTH with after tax money.

That is a money losing formula over the short, intermediate and especially the long term.

The company contribution structure you enjoy is becoming VERY rare in the US workplace. Use it to your maximum advantage.

Always, always, always take the free money from the employer. Always do at least the minimum contribution to get the full match. While the match is not free money, it is tax deferred. Also, since you still pay FICA on your 401k contributions, you will not pay that tax amount on the matched funds.

I don't think you realize how good your company's 401k program is, nor how rare it is.