- April 21, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Questions about ESOP, 401k, and Retirement Planning
Hello all,
I have a few questions about ESOP, 401k, retirement and what the best plan to do here is.
### Background Information
I’m 30 years old. I took a little longer in college than I intended to so I started my first real job at 24/25. (I have worked since I was 16 part time and then 2 part time jobs technically working full time hours) so I feel like I’m late in the game.
My first “real” job was a store manager for a grocery chain. When I started I made around 41k and when I left (just left the job last month for something better) my ending salary was 54k. This company used ESOP (Employee stock ownership program). That’s the only retirement plan they offered and they pushed it HARD. Like, religiously. The company is a good company, they own other stores and brands, very successful business and operation.
Recently received my ESOP statement from them. I technically have worked for them 5 years but since the statements run a year behind this recent statement said I’m 60% vested. Total money in my stocks is 23,500 but since I’m 60 vested I technically only have 14,000ish.
Like I said, I just recently left that job and now work in banking. I was offered a better position (in loans) making 60k a year (better schedule, less stress etc) so now I’m making 6k more a year. And the bank has 401k. Since I’ve only had one “real job” and it had ESOP. I’m new to 401k. My new job will match 5%.
### Specific Questions
1. I’ve asked before and seen other conversations about ESOP vs 401k and which is better, from what I read most prefer and think 401k is better?
2. With my ESOP statement saying I’ve worked 4 years and have $23,500 in stocks, how good is that for that period of time? Would a 401k been better?
3. Since leaving that company I want to take my stocks and roll them into a IRA, is this what you guys would recommend? I don’t want the money now, I want it to grow. I’m not even sure where to start when setting up an IRA with that money.
4. With 401k and them matching 5% is there a guide of how much I should be putting in?
5. I guess my final question is for me being 30 years old, how far behind am I on retirement savings?
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1. You really just deal with what your employer offers. The importance is that they offer something and you take advantage as best you can.
2. Based on your salary, I think you’ve done pretty well. You participated and have something to show for it. Keep it up.
3. It might be possible to rollover the ESOP balance into your new 401k or into a rollover IRA at a custodian of your choice (vanguard, fidelity, Schwab). Once it’s in the new account, you’ll have to invest it. I’d suggest something simple like a total market index or target retirement date fund.
4. At a minimum you should be contributing 5% of your salary so that you get the full match. There likely is no vesting period so that money is yours as soon as it hits your account.
5. I’d suggest, if you’re able, to tuck more money away via a Roth IRA which you can fund with up to $7k for 2024.