Question

nana is a new graduate who just started her first full - time job. she has limited savings and wants to take full advantage of any employer match to grow her retirement savings as quickly as possible. which retirement plan option would best fit nanas financial goals? a 401(k) with 75% employer contribution matching up to 5%, a two - year cliff vesting schedule, and lower fees for early withdrawals a 401(k) with 100% employer contribution matching up to 6%, a five - year cliff vesting schedule, and higher fees for early withdrawals a pension plan with fixed monthly payouts upon retirement a 401(k) with 100% employer contribution matching up to 5%, a five - year cliff vesting schedule, and lower fees for early withdrawals

Explanation:

Nana wants to grow her retirement savings quickly. A 401(k) with 100% employer contribution matching up to 6% means her employer will match every dollar she contributes up to 6% of her salary. This is better than 75% matching. A two - year cliff vesting schedule (in the first option) is better than a five - year one (in the second option) in terms of getting employer - contributed funds sooner. But if we assume the employer match percentage is more important (as 100% vs 75% is a big difference), and if we consider that a new graduate may stay with the company for a while (to get the full vesting), the 100% match is more beneficial. Pension plans (third option) are not related to employer matching for her contributions.

Answer:

a 401(k) with 100% employer contribution matching up to 6%, a five - year cliff vesting schedule, and higher fees for early withdrawals