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My 401k Is Better Than Yours

For some odd reason, some friends of mine were talking about 401k’s at the bar (talking personal finance stuff is not typical, but complaining about work is and this was just an extension of that) and basically they were comparing 401k plans. I, enjoying my pizza and shuffle puck, was dragged into the conversation because I represented another employer and so they wanted to see what the various industry 401k plans were like.

Here were the three 401k plans:

Large Defense Contractor: 3% match on a 4% contribution (100% match on the first 2%, 50% match on the next 2%), no profit sharing, immediate vesting.

Defense Consultant Firm: No match, 10% profit sharing after your first year, 5 years until fully vested.

Not-For-Profit Research Lab (with defense contracts): 8% match on a 4% contribution, no profit sharing, immediate vesting.

Remember, the 401k isn’t the only measuring stick when it comes to benefits and there are other aspects that change the financial equation. For example, with the Large Defense Contractor (LDC) and the Not-For-Profit Research Lab (NFPRL), you get a pension of some kinda, in fact the NFPRL’s 401k is really an extension of their pension plan. With the Defense Consultant Firm (DCF) you get no such pension, hence the profit sharing of 10% of your salary with no need for you to contribute any funds yourself. Also, immediately vesting is great for the employee (terrible for the company) because it gives you greater flexibility – 10% isn’t so awesome if you have to wait 5 years to get it all.

What’s your 401k plan? If you could swap your current plan with one of those, would you do it (all other things being equal, including your plan options, fund choices, etc)?