Should You Bother With Your Company's 401(k) If There's No Match?

One of the biggest perks of having access to a 401(k) plan is scoring free money in the form of an employer match. Even small matching policies can go a long way toward helping people build retirement savings.

If your workplace 401(k) plan doesn't offer a match, though, then you may be wondering if it pays to contribute to that account versus find another home for your savings. The answer? It depends on what your 401(k) can do for you.

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Why it could still pay to fund your workplace 401(k)

Even though losing out on a company match is a huge blow, there are other benefits to saving for retirement in a 401(k). First, you get a tax break on your contributions with a traditional 401(k), and your money gets to grow tax-free.

Also, 401(k)s make contributions easy. You decide on an amount you want deducted from your paychecks and your payroll department takes care of the rest. Those automatic contributions could be your ticket to staying on track with retirement savings.

Why it could pay to choose a different retirement plan

While 401(k)s are easy to fund and come with higher contribution limits than IRAs, an IRA may be a better choice if your 401(k) doesn't come with a match.

For one thing, IRAs tend to offer a much wider range of investment choices. You can buy individual stocks, for example, which you typically can't do in a 401(k).

Also, because you get more investment options, you may be able to keep your fees lower in an IRA. And the less money you lose to fees, the more you get to keep.

What's the best option for you?

It generally pays to fund a 401(k) up to your workplace match at the very least. But if you have no match, you shouldn't feel pressured to participate in your company's 401(k).

If you're not sure whether you should or not, ask these questions:

• Do my 401(k)'s investment choices work for my wealth-building strategy?
• Do I have access to enough low-cost investments?
• Does my 401(k) charge large administrative fees?
• Will I really stay on track with my savings if I stop having funds deducted from my paychecks automatically?

Running through these questions should help you decide if that 401(k) is worth participating in. And remember, just because your employer doesn't offer a match today doesn't mean that benefit won't ever be on the table. So if you opt out of that plan this year, revisit the situation next year in case your company has a change of heart.

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