Sometimes we’re just happy to be with an employer that has a 401(k) plan, since so many don’t.
It may not even seem important whether or not it’s a good plan or a bad one – at least not at the beginning. After all, any 401(k) plan is better than having none at all.
But there are bad 401(k) plans out there, and that becomes even more important and obvious the longer you’re in one.
What are Some Signs of a Bad 401(k) Plan?
No employer match
One of the real incentives to invest money in a 401(k) plan is an employer match.
A typical match is 50%, where the employer contributes 3% of your income while you contribute 6% out of your compensation. Employer matching contributions can be more or less generous.
Some employer plans provide no match at all. In and of itself this does not indicate a bad 401(k), but in combination with other negative factors it’s a strong sign.