16 Oct I got my first job. Can I opt out of the company pension?

Q. I’m starting my first job. I’m saving the most I can to a 401(k). There is also a pension that I have to contribute to, but I know that I won’t stay at this company long enough to get vested. Is there any way to NOT save in the pension? The HR person said she’s never heard of someone asking this.
— Worker

A. Congratulations on your first job.

It’s a very exciting time, and we’re glad to hear you want to save for the future.

It’s always a good idea to get the most of your company’s 401(k) plan, making sure you are contributing enough that you receive at least the full matching funds offered by the company, said Daniel Cocco, a partner with Beacon Wealth Partners in Nutley.

Your employment contract should include more information about the pension plan requirements. You should review that closely, Cocco said.

Cocco said you should also remember that all the money you put into a 401(k) or other retirement plan remains yours once you leave, regardless of vesting.

“The company’s contribution is the only amount subject to vesting,” he said. “For example, you may need to stay with a company for years to receive 100% of their contribution to your retirement plan. But let’s say it’s vested at 20% a year, so in Year 3, you are vested at 60%.”

Go back to your HR department to see if there’s a way for you to skip contributing to the pension, but you probably can’t. Still, the money that goes into the pension, if you don’t stay long enough to vest, belongs to you.

You’ll be able, when you leave the job, to roll the funds into an IRA.

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This story was originally published on Oct. 16, 2023.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.