In today’s highly competitive job market, you may not be able to be as choosy as you might have been in the COVID era.
Still, if you’re in a high-demand industry, you could one of the lucky few who can weigh several different job offers.
While you might be tempted to sign up with a company offering the best compensation and working environment, you might also want to consider other factors as well, such as the kinds of health and dental insurance they offer (and their associated monthly premiums and deductibles).
And don’t forget about their 401(k) plan. The perks of top-notch plans could outweigh negative factors, such as a slightly lower starting salary.
You have a right to ask a potential employer to provide information about their plan. When they provide it, pay close attention to the following factors.
Enrollment timeframe
Most employers require you to work for a certain period of time before you can enroll in their plan. Fifty percent of plans require full-time employees to accrue one year of service, while 21 percent let new employees enroll immediately. Other plans fall somewhere in between.
Plans with longer timeframes generally do so because they don’t want to take on the costs and administrative burdens of enrolling employees who may end up leaving the company after a short time.
But the longer you have to wait, the longer you’ll have to forgo the benefits of participation.
Employer matching contributions
Companies don’t have to offer matching contributions. If a company you’re considering doesn’t, you could potentially be sacrificing thousands of dollars in extra contributions to your retirement nest egg.
Even companies that do offer matching contributions may require you to work there for as long as two years before you start receiving them. Plans that choose this policy must fully vest these contributions immediately.
When they make these contributions may matter as well. Some make matches with every paycheck, while others may make you wait until year-end to receive them as a lump sum.
Vesting
If you don’t plan on staying with an employer for more than a few years, then its vesting schedule for employer contributions may be a deciding factor.
With many companies, matching contributions vest immediately or fully vest after two years of service. Others may make you wait five years or more before these contributions fully vest.
If you leave before you’re fully earned these employer contributions, you could be leaving thousands of dollars on the table.
Roth 401(k) accounts
Most companies allow participants to make after-tax contributions to a Roth 401(k) account, but plans aren’t required to offer them. Some plans only allow you to make either pre-tax or Roth 401(k) contributions, but not a combination of both.
Why could this be a deciding factor? Because with a Roth 401(k), you’ll never have to pay taxes or penalties on withdrawals if you make them after age 59½ once you’ve owned the account for at least five years.
You’ll never have to take Required Minimum Distributions, either. And if you eventually roll over money from your Roth 401(k) to a Roth IRA, you’ll never have to pay taxes on qualified withdrawals.
Catch-up contributions
The maximum amount you can contribute to your 401(k) account in 2025 is $23,500. But if you’re over 50, you can make up to $7,500 in additional “catch-up” contributions. And if you’re age 60, 61, 62 or 63 your annual catch-up contribution maximum increases even more, to a maximum of $11,250 in 2025.
The catch here is that your plan must allow for catch-up contributions. Not all plans offer them.
Another consideration: If your salary is $145,000 or higher, starting in 2026, all catch-up contributions must be made as after-tax contributions to a Roth 401(k). If the plan doesn’t have a Roth 401(k) feature, you may not be able to make catch-up contributions, period.
Investment options
Any potential employer’s plan should offer a diversified lineup of investment options, from low-cost index funds and actively managed stock and bond funds to target date funds that automatically allocate your money among a mix of stock and bond funds based on the year you plan to retire.
If you've invested in certain kinds of specialized funds in the past, such as real estate funds or socially responsible investing funds, see if the plan offers similar options.
Access to personalized advice
If you need help making investment decisions, it may be important for the plan to offer access to a dedicated financial advisor or call center.
Portability
If you have 401(k) accounts with former companies or a Traditional IRA, can you move assets from these accounts into the new plan with minimal hassles? Not all plans allow for these transfers.
Finding 401(k) facts
All of a 401(k) plan's features are explained in the plan’s Summary Plan Description (SPD), which must be provided to all plan participants. If the quality of a prospective employer’s plan is important to you, ask them to provide an SPD before you make your decision.
While an employer’s 401(k) plan itself may not be a primary reason for choosing one job offer over another, a plan that offers generous employer contributions, immediate or fast vesting schedules, a wide variety of investment options, and Roth 401(k) and catch-up contribution features says a lot about the company’s commitment to attracting and retaining employees and helping them save for retirement.
This article was authored by David Jaeger and Jeffrey Briskin. David is a financial advisor with Canby Financial Advisors, a SEC-registered investment adviser. SEC registration does not constitute an endorsement by the SEC nor a statement about any skill or training. David can be reached at 508.598.1082 or djaeger@canbyfinancial.com. Jeffrey Briskin is Director of Marketing at Canby Financial Advisors.
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