I always say that the reason I don’t have employees is because I was an employee too. One f the frustrating things was changing jobs. There was a two yearsstretch where I went through a couple of employers.
I will say that when considering a job offer, one of the big issues was 401(k) eligibility. Whether it was 6 months or a year, requiring me to stay out of a 401(k) plan was a big deal. As an employer trying to recruit employees, I would recommend considering eliminating the eligibility requirement for salary deferrals, while keeping it for employer contributions. With deferrals, you can still test the plan as if there is still a one year eligibility reuirement. I understand that turnover would mean more smaller account balances with immediate eligibility, but it serve as a huge recruitment tool, especially if you employe people making $75,000 or more.
There are a lot of reasons why people may reject a job offer, I just doin’t think eligibility for 401(k) salary deferrals should be one of them.
