401(k) Employer Match

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401(k) Employer Match

Adam Rosi-Kessel
I have a 401(k) with a 50% contribution employer match that vests over four
years. So far, I just haven't been accounting for it at all. I didn't see
anything in the Wiki FAQ about 401(k)'s.  Any suggestions of how best to
handle that?
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Re: 401(k) Employer Match

Roland Roberts
>>>>> "ark" == Adam Rosi-Kessel <[hidden email]> writes:

    ark> I have a 401(k) with a 50% contribution employer match that
    ark> vests over four years. So far, I just haven't been accounting
    ark> for it at all. I didn't see anything in the Wiki FAQ about
    ark> 401(k)'s.  Any suggestions of how best to handle that?

With the usual IANAA, I have a split on each paycheck that goes to a
"savings" account for the 401k contributions.  I then reconcile the
actual purchases with my statements.  I do the same thing for my wife's
401k although her plan does not give detailed transactions, only
quarterly summaries.  So for that I set up a spreadsheet where I could
plug in all the values to get things like average purchase price, etc.,
based on the loss/gain and dividends reported.

regards,

roland
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debit

Andrew Sackville-West
In reply to this post by Adam Rosi-Kessel
On Wed, 08 Feb 2006 13:05:07 -0500
Adam Rosi-Kessel <[hidden email]> wrote:

> I have a 401(k) with a 50% contribution employer match that vests over four
> years. So far, I just haven't been accounting for it at all. I didn't see
> anything in the Wiki FAQ about 401(k)'s.  Any suggestions of how best to
> handle that?

well, handling the vesting is probably pretty complicated, but I think you could handle it by having a seperate account for the vested and unvested portions of the employers contribution. Over time, as the vesting changes, you can move shares/money/whatever from one account to the other until you're 100% vested. after that its fairly straightforward.

You need an income account (call it whatever you like, but something like "tax-free contributions" would make sense) that is used soley for those employer contributions. With each paycheck, include a split for income from that account that moves money from income to your 401k. simple.

say you do this in your checking account for each paycheck:
                        debit credit
Income:wages 1000.00
Income:tax-free 50.00
401:my contrib 100.00
401:nonvest empl. 50.00
Checking 900.00

Then in 4 years when you're vested:

401:nonvest empl. 50.00
401:vested empl. 50.00 <- could also just use 401:my contrib here

A

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