21 thoughts to “Ask the Bitches: “Can I Quit With Unvested Funds? Or Am I Walking Away From Too Much Money?””

  1. Two years is a long time in your 20s!

    That said, most people leave because of their boss. It might be possible to stay in the same system but have a better boss. That will depend on how big your system is to stay on the program (like, do you have to stay at your current job, in your current department, in your current university, or just anyplace in the state you live in?) If you don’t know what else you want to do it might be worth looking into that pool as a whole to see if there’s anything worth applying for that you could try out for a couple of years.

    I swear, not all departments have staff/faculty drama. There are functional departments and dysfunctional departments.

    But also, there’s a lot of careers out there and a bigger salary profile is going to knock the socks off of any lost 401k matching over 3 years.

    1. I would normally suggest the same thing! But I edited the letter down to keep it brief; Leah actually mentioned having recently changed departments, with no better results. (Actually, it sounds like things got worse!) That made it much easier for me to advise “throw the whole man out.”

  2. This is a small example, but here it goes.

    I recently got a job offer, so I’m serving my notice now, then starting at the new place in March (I have stupidly long notice period – this is normal in my sector in the country I live in). When I was job hunting, I knew I had to go, but I was a little bit sad that I’d have to give up some of the perks that I have in the current job. The perks are:
    – Because I’ve been here for over 3 years, I have additional holiday days – bringing me up to 27 (from a new starter’s 25).
    – For the same reason, I get 20 fully paid sick days. Which is very important to me, because I have a chronic illness that makes seasonal flu/cold fucking brutal.
    – Because of recently introduced flexibility, I get to change my work hours to early start and early finish, which I like because I’m a morning person.

    But there were other reasons to change jobs, so I waved my perks goodbye and went on a hunt. And the new job? I get 30 days of holidays, 40 fully paid sick days, and my new manager is happy for me to keep my preferred schedule for 4 days a week, and in the one remaining day, I just have to move everything 30min later.

    So I think my moral is, you know what you might be losing when you change, but you don’t know what you might be gaining.

    1. Oh man, what an amazing amount of paid leave. As a contractor right now, I have 0. And even in my former jobs the most new hires ever got was 10 days. I think one company offered 20 days after you’d worked there for like 10 years or something.

      1. It is very generous. I think the legal minimum for holidays is 20 days, and for paid sick leave, they don’t have any legal obligations beyond paying statutory sick pay, which is something like £100 a week.

        To be fair, I am in a sector where salaries tend to be on the slightly lower side, but they still have to attract talent. So they go out of their way to offer other benefits. But even taking this into account, I was stunned by the amount of sick leave when I was reading the contract.

  3. An excellent article as usual! Thank your for delving into the behavioral side – it is ultimately more helpful for folks to understand why they feel the way they do. It makes it much easier to address the root feeling instead of just the dollar signs.

    I stuck it out at my previous job for two years for two big reasons – one being deferred comp (RSUs that vested annually over three years – which paid for my wedding and funded a lot of my savings goals) and the other being education reimbursement. That job paid for my schooling (around $6k) over those two years which I needed to obtain a new job in a new industry that I love!

    Overall, while I did end up in this sweet new career, I will admit that those two years were hell for me. My company left my team in the hell scape that is way too much work and not enough people to do it. I was burnt out, anxious, depressed, and struggling to see the light at the end of the tunnel and then the pandemic happened and it got worse!

    Looking back, I could have afforded to pay for the schooling myself but in order to afford the wedding I would have had to find a new job that paid significantly more which given the burn out/stress/anxiety place I was in, I didn’t feel I had the capability to do at the time.

    Weird how a job can feel so bad that you don’t have the energy to look for a new one!

    Anywho, thank you for doing what y’all do. You are rocking it!

    1. “Weird how a job can feel so bad that you don’t have the energy to look for a new one!”

      THIS, THIS, 100% THIS. The mental toll of shitty jobs are SERIOUS BUSINESS. They affect everything in your life.

  4. I agree with NicoleAndMaggie’s last comment. To run the numbers, Leah’s portion of her 401k is about $20k right now, and $10k is unvested (I’m assuming that takes into account any partial vesting from a schedule, so I’m taking that number at face value). That’s over 3 years, so there has been some growth, which means Leah probably contributed somewhere between $4k/year and $7k/yr. That means that Leah is NOWHERE NEAR the limit on 401k contributions.

    So if Leah finds a new job that pays $5k more per year, she could choose to make absolutely no changes to her budget for two years and sock that much extra in her 401k (of her OWN money). Then after two years she’s pretty even to where she would be, but oh by the way she is still making more money. If she found a job that pays $10k more, she could spend one year making back her lost matching contributions, and then keep getting paid more money!

    But here’s the other side of that: if she found a job that she likes more and pays exactly the same, so *poof* that $10k match is gone forever… by the time she hits 55, “the money that never was” will have grown (assuming a real growth of 5% per year) to about $40k. Whereas (assuming that same real growth and annual 401k ongoing contributions of $5k) her OWN contributions would be about $420k. If we change that assumption of about $5k per year to go up by $1k each year (after accounting for inflation… up to a limit of putting away $20k in today’s dollars 15 years from now), then her OWN contributions would have grown to about $1M.

    Leaving now for happiness and more potential career growth – that is, NO SALARY BUMP – is worth it in terms of loving yourself and your life and also saving for retirement. If you get a salary bump as well, then it gets even better.

  5. Great information! I’m not looking to change jobs at the moment, but I have had it in the back of my mind that I would have to walk away from stock-based compensation if I ever did. My company adds new stock with a 5 year vesting schedule each year, so that carrot is always going to remain.

    One minor point regarding the bonus taxation – while your employer does withhold taxes at a higher rate on bonuses, the actual tax rate calculated when you file taxes at the end of the year is your normal tax rate. Your employer has the choice of using the maximum rate or a special formula for estimating a correct rate (still typically a higher rate than normal), most choose the maximum rate because it is easier.

    It sucks to see such a big bite taken from your bonus check, but it reduces the risk of people owning taxes at the end of the year. Instead you either get a refund or a smaller tax bill.

  6. As a fellow horrifically underpaid public university employee – all of the above. The lovely thing about being a university employee though, is that you can continually job-hop departments until you find a good one. Treat them like the pokemon they are, and catch as many as you can – nabbing a 3% wage increase each time.

    The benefit to me for staying at the university I’m at is the union protection. I live in an at-will state, but my union benefits dictate that I can only be let go with sufficient, documented cause. As a solo parent, not being fired on a whim is crazy important to me. So while I currently have a superbly awful boss, I’m moving departments in a few weeks. I’m giving up a job that I enjoy with people I like to expand my abilities and shake off the hellscape that is a department in the middle of a crash and burn. And I can keep all of my perks and investments.

    Of course, everyone needs to do what is best for their own lives; staying where I can’t be fired because someone doesn’t like my RBF (true story) is important to me.

  7. It seems like state/public institutions have worse vesting options than many corporate ones. My state changed from a 5 year vesting to 10 year vesting (not incremental) the year I started. That immediately gave me no plans to ‘hang in there’ unless I really wanted to. Most businesses tend to have a more favorable vesting option – my last one didn’t contribute until your 1 yr anniversary but after that you were fully vested. Another one vested incrementally over time – 20-25% a year, so you received something if you were there at least a year.
    Unless she can find something that really appeals in the same system (i.e. sometimes university systems are related to state retirement systems if they are public) it is not worth sticking it out for 2 more years. That’s a lot.
    While many corporations do better on retirement – their ‘golden handcuffs’ tend to be deferred Stock options that vest over time. My last company it was 25% over 4 years. It’s fine if you like your company and plan to stay anyway but otherwise it sucks. My manager thought I would be happier about my ‘award’ but what’s to be happy about something you can’t cash out – except in small bits over the next 4 years??? (And it wasn’t that much.) I would have been much happier if it was a cash bonus but companies loooove to string you along.

  8. Hi BGR,

    This article says that bonuses are /taxed/ at a higher rate than the rest of your salary, but I don’t think that’s true. Bonuses are /withheld/ at a higher rate, yes, but doesn’t this even out when you file your taxes? If you’ve overpaid on taxes (whether that be on bonuses or your regular withholdings), won’t you get a refund for the amount you overpaid?

    1. Seconding this. Bonuses are withheld at a higher rate, but are taxed just like other income. The article linked also notes this, although for whatever reason seems to be fairly misleading in its highlights section.

  9. Uggghhh, I had such a similar experience at my first full time job out of college! It was a shitty place to work (Family owned independent yellow pages publisher) and they also had a 5 year vestment for their 401k matching. I did all the right things! I maxed out that matching by investing 6% to get their 3%!

    But it turns out, even 6% of a terrible, terrible low wage is hardly anything! I ended up leaving after 4 years, so I lost most of their match, and I ended up in an equally terrible job. HOWEVER! I still think it was the right thing to do, and I agree with the article’s advice to GO GO GO. Your mental health is SO IMPORTANT. You cannot put a price on that. It leaks into _everything_ else.

    Now that I have years more of experience, and this article, I can now recognize these scams for what they are and avoid them if possible, or at least weigh their financial implications more accurately.

  10. ‘Vested’ pension funds are such crap. In the UK, any matched funds are deposited into your pension account along with the amount you invested. Full stop. None of this takesie backsies.

    OP, yes, 10k is a lot. You get that over 5 years, so 2k per year. If you earned 20% more, you’d get that 10k in 4 years, 1 year faster. Cut your losses and get a better role that pays more.

  11. Here is my vote for “short-term, strategic quit-timing good – long-term gritting out horrible situations bad” from personal experience:

    I was badly underpaid in a job I hated with people who were loudly racist, homophobic, or otherwise generally AWFUL in my immediate space. I had vaguely thought about going back to grad school.

    Then I found out I was pregnant, and my mentor very bluntly told me, “If you want to keep that baby, get the HELL out of that job, woman! You’re going to stress yourself right into a miscarriage there!”

    I registered for two grad school classes in non-matriculated status, got my mentor (who had nothing to do with that job) plus one decent manager from that job and a third reference I’ve now forgotten to be part of my official application, and timed my quit for early February. It was right after the semester started, I’d still have most of the month before my health insurance lapsed, and I’d get the payout for my vacation bank that had rolled over in January, which would give us just enough money to make this entire scheme work out okay.

    About a week after I quit that job, I had a serious miscarriage scare – thankfully, the baby turned out to be okay (he’s a teenager now). I got Medicaid and WIC and student loans and my husband also went back to school and took two part-time jobs. Then I graduated and got an offer for a job that paid just barely less than what my husband and I had been making COMBINED, full-time, and had extremely good health insurance coverage in a way that was specifically relevant to our situation at the time. This job wouldn’t have been an option without my shiny new degree.

    So that was a short strategic wait that was the right thing to do to set a lot of good things in motion. But it was also a cautionary tale because if I’d waited any longer I might very well have lost the baby, and even if not, trying to recover from that scare while working at a job where the people were horrible would have been…Very Bad.

  12. I wish I could send this article to my younger self. It would’ve changed the direction of her life.

    So I like to think, at least. Maybe graduating uni a few years after the Great Recession hit was always gonna put me in a terrible place in terms of career, but I think my choices to stay, to play safe, to follow rules, to “work hard and you’ll be rewarded!” like capitalism says…those contributed. If I’d been more cutthroat and less patient, I would be in SUCH a better place right now, and it’s something I may always regret.

    People were always saying young people were impatient and disloyal, constantly job-hopping… It was said in a judge-y voice, so I determined I wouldn’t be one of those people! And now I’m in my early thirties, 30k total retirement, living with my parents, still haven’t had a job that doesn’t pay by the hour…

    Fuck the system.

    I’m so grateful you two badass superheroes are out there helping the next gen do it right. You guys are seriously wonderful. You’ve changed ways I interview, quit, work, plan, buy, and save, and done the same for so many other readers too. THANK YOU.

Leave a Reply

Your email address will not be published. Required fields are marked *