The Earlier, the Better: More companies are allowing new employees to almost
immediately join their 401(k) plans, according to a recent survey by the Profit
Sharing/401k Council of America. Since 1998, the number of plan sponsors that
allow employees to participate in their 401(k)s within a month of being hired
has doubled—from 24 percent to 51 percent, the report says.
Seventy-one percent of companies said that employees can join their 401(k)
plans within three months of being hired. That number rose to 84 percent for
large plan sponsors, defined as those with more than 1,000 employees. Only 17
percent of all plans surveyed have a one-year waiting period.
A slight majority of employers (52 percent) say they require that employees
work for the company for at least one year to be eligible for non-matching
company contributions. Forty-two percent of plans have no minimum age
requirement for plan participation, although 21 percent of plans said they
require an employee to be 18 before they can participate in the plan.
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