I didn't know any law firms actually contributed to 401k plans.

Many large law firms do not contribute to associates' 401k plans. The last firm I was at (a large Atlanta firm known for being employee friendly) contributed to the partners' and staff's 401k but not the associates.

I would gladly take an equal hit in salary for a 401k match - if you contribute the $15.5K max anything above that is gravy and tax-deferred.

Reed Smith is cutting their associates' 401(k) contributions to coincide with their recent pay raises.

Maybe it is a Pittsburgh thing to cut 401(k) contributions? Any word on Cohen & Grigsby? or Buchannon Ingersoll & Rooney?

Reed Smith is cutting their associates' 401(k) contributions to coincide with their recent pay raises.

Maybe it is a Pittsburgh thing to cut 401(k) contributions? Any word on Cohen & Grigsby? or Buchannon Ingersoll & Rooney?

Yes, I second the first 10:10 post. I think K&L Gates woke up and realized that they were the only firm doing this.

I think the problem is the a vast majority of 3Ls are so blinded by the $$$, that they cannot comprehend the value of a match versus upfront comp. If Skadden is offering $160 in DC and Arnold & Porter is offering $150 + match, they will go to 160k because they cannot comprehend the difference.

This is really a product of a financially ignorant young legal community.

DC down to $150 + $10k match!

My firm (~100 attorney regional) pays $145,000 and does matching max in 401k.

10:24 - The problem with matching plans for most associates is that you are not fully vested for 5 or 6 years. I have a friend at a firm that throws in 10% of what he does (so $1550 this year) and he is a 6th year and still only 60% vested.

So, while in general, what you have said is true, in light of associate turnover, most associates are unlikely to ever "own" more than 20-40% of the firm's matching contributions. So the associate taking the cash up-front may not be as bad off as you say, if he or she is the "average" associate who leaves in 2-3 years.

10:17, never heard of any of those firms. The title says Biglaw.

10:24, 100 attorney regional is not Biglaw. Though 145K (first year I presume) plus matching max is very good. Where are you located.

Do any Biglaw firms match? I think this is some valuable info for people looking.

K&L who?

Cleary takes 3% of your pre-tax salary and puts it into your 401K automatically (which is on top of your personal limit). It's a great way to boost your 401K.

White & Case does not match 401K conributions, and has not since I started in 2004.

My wife is a teacher. Every penny we contribute to 401(k) goes to *her* 401(k), which works out, with the state contribution, to $30k per year. My firm does not contribute and as far as I know, never has. I don't mind though, still lots of good benefits around here.

Alston in Atlanta takes 5% of your pay and burns it in front of your face. Does that count?

Ok, I really don't know much about this (my Chicago biglaw firm doesn't match or contribute and previous job after undergrad only paid ~50K so I never maxed) but I thought the maximum contribution (15,500) was the max you were allowed to put into a 401k per year, regardless of the source? It seems like people are saying that if I put in the max 15,500 and my employer matches 15,500 then I am allowed to put 31,000 into my 401k in one year? Is this correct? I was under the impression that if an employer truly did match then the most I personally could put in would be 7,750 and employer would match 7,750 for the statutory max?

Wilmer Cutler used to match for associates' 401(k), albeit not a lot and not for the first year -- but after the merger with Hale and Dorr, that went away.

My firm contributes 15%, even if you don't contribute. It is a huge benefit, and part of the reason so many partners retire early. There is no cap to the contributions either, as many partners get a six figure contribution (although they get hit with taxes on some of that money). If they took that benefit away, thing building would burn down.

For us law students out there, do firms report in the NALP directory whether they match? I felt a little weird this summer asking 'So what benefits would I have on top of my obscene salary?' so I have absolutely no idea whether the firm at which I have an offer matches or not.

I am surprised that any big law firms still contributed to associate 401(K)s. Those firms' management must not have been paying attention. This is an area screaming for cutbacks or elimination as a way to claw back money from associates.

About 6-7 years ago Fulbright & Jaworski dropped non-vested associates (i.e those under five years of service) from its retirement plan with no notice. Actually, we got notice in the form of a registered letter delivered at home on a Friday, but before that no one knew this was coming. I am sure that they hoped the associates would forget about it by Monday. The surprising thing was that Fulbright had previously talked up associate participation in the retirement plan to the summer associates and to the associates themselves. They even kept talking about what a good deal the retirement plan was after they cut it - I was still hearing about how great it was last year. I had the impression that the non-management partners never knew the associates were dropped from the plan.

To be fair to Fulbright, they left an opening in the plan where you would vest "if your status changed," which basically required you to make partner to paticipate. At that time your years of service (9-10 at F&J to make partner) would count in a formula that used "qualified" salary. The salary that counts in the retirement pay calculation does not include associate pay, so when you finally vest (which means you made partner and didn't leave as part of the on-going turnover at F&J) you start off with nothing anyway. The qualified salary in the retirement calculation includes an average of the last five years, so you really have to stick around for another five years after vesting to generate any value. But if you were in the plan before it got cut and then left - you have some percent of nothing, which I think is nothing. Douche bags.

I am sure some ERISA lawyer would understand this better than I and find plenty of errors in this explaination, but the bottom line is Biglaw will screw you in the wallet every time. When I asked a member of the firm management committee why they cut the associates, she said "the associates didn't seem to appreciate it." Yeah, surprise, surprise, a 25 y/o new law school grad does not closely monitor retirement benefits - so cut it while they're not looking.

10:53, I think the most you (as an individual) can put in is 15,500 pre-tax. You can put whatever you want post-tax.

So you put in your 15,500 (all pre-tax) and you employer puts in 15,500 (I'm not sure of the tax treatment on this contribution, but it is not coming out of your pocket).

10:57 -- Hmm, why don't you look it up and stop bothering us with stupid questions. Learn to think for yourself. This is what pisses us off about 1st year associates too.

@dumbass. employer matching contributions up to six percent of an employee’s pre-tax salary are not included in the annual contribution limit. that's why the match (or the cleary-style contribution) is particularly valuable to employees.

I thought nn-matching had something to do with the plan becoming too "top heavy" if it matched the high-earning employees.

10:32 - dont be a dumb ass. K&L Gates has 1,400 lawyers & 22 offices. That BigLaw enough for you.

Ignorance is very unappealing.

I'd love a match, but I'm not going to forego upfront compensation for it. These handcuffs are tight enough as it is.

My firm simply matches staff and partners.

10:53 - the 15,500 is how much you personally can contribute. there are catch-up contributions that are allowed if you are over a certain age (50? - not sure). if you meet the age requirement you can contribute an additional 5K.

10:58, are you saying that Fulbright does not let their associates contribute to their 401k whatsoever? That really sucks.

Has anyone ever attempted to compile a list of the firms that DO match? Lat, I bet many of your readers would appreciate this info

WilmerHale still matches for the people who had matching under the Wilmer Cutler system, they just didn't give it to the Hale & Dorr counterparts and they didn't give it to anyone new - once again, DC gets all the perks.

1,400 lawyers in 22 offices? Sounds like a McDonald's to me.

My firm matches your 401(k) based upon your penis size.

Fair System -

A grand an inch gives you 2 grand a year!

I don't know of any biglaw firms that match. I know mine does not.

LAT, why don't you gather the info on which firms actually match.

Good idea for Lat to compile a list. Andrews Kurth matches 401k contributions!

My organization matches 4% to my 401k and sets aside 5% on the first 97.5K and 10% above that in a special tax-deferred plan for retirement.

Never underestimate the benefits of going in-house...

uh my biglaw firm doesnt match attorney 401ks...only staff. i thought it was because we were considered "highly compensated employees"?

Do any big firms provide a match without a vesting period?

Holland & Knight does match.

I believe AK matches 25%. I think 3 years to vest.

sutherland matches

McKee Nelson matches, does it not?

Anon 11:26,

If it were only two inches, your wife would stop calling. Now go say hello to my......I mean your children.

12:37, you an a--hole.

given my starting salary of 160K, no matching, and intention to contribute the limit each year, does anyone know if it makes more sense to contribute to my firm's roth 401(K) or to the traditional one?

i'm pretty sure Sheppard Mullin matches after a certain time being with the firm (i think 2 years)

12:56,

I believe, but could be wrong, that there is an income limit for Roth 401(k)'s. I know there is with Roth IRA's.

That being said, if you are just starting out and in your twenties, it makes sense to put at least a portion of the money into the Roth. If you put all of your contributions towards there, you will lose some tax nice tax deductions. However, with such a long horizon to invest, it will help to allow those gains to be taken out tax free. I would start by putting say 75% in the Roth, trimming this percentage every 5 years until you are only putting in about 25%.

Just my advice, and it may be worth what you paid for it.

12:53,

Very creative post. I am sure 12:37 will come back with the inventive "I'm rubber, your glue..." retort and then we can all have a time out for milk and cookies.

Is there a way for this site to block students from posting?

K&L Gates: headquartered in pittsburgh. ha!

There's no income limit to contribute to Roth 401(k)'s. This article about tax diversification is something to consider when deciding which type of account to fund (I personally fund 50% in Roth and 50% in traditional): http://money.cnn.com/2004/03/25/retirement/investing_taxes_0404/index.htm

K&L Gates took away the associate match so they could give more retirement benefits to the partners. Their primary intent wasn't to squeeze money out of associates but to give more money to the people they really care about - parnters. But I am sure it is not a unhappy byproduct. You don't see K&L Gates management grossing up associate pay to attempt to make up the economic difference. Instead, they believe that the pay "remains competitive". Which is unfortunately another problem with big law, if the majority of big law isn't giving associates retirement benefits there isn't as much incentive to offer something your competitors do not offer. Big law can be very "follow the leader" on associate compensation and benefits.

Traditionally, I do not believe big firms give retirement benefits to associates because of the IRS rules on nondiscriminiating testing. Because associates are "highly compensated employees" (make more than $100K), the IRS does not care if they discriminate against associates and it helps with nondiscriminating testing to give other "highly compensated employees" (i.e. non-partners) less so they can give other "highly compensated employees" (i.e. partners) more.

It's unfortunate because ideally you would hope employers would try to encourage their employees (all of their employees) to save for retirement. Whether younger employees may not fully realize the value, it would be nice if employers tried to help them realize the value.

BTW, there is no income limit on Roth 401(k)'s, just Roth IRAs.

So associates are highly compensated and highly discriminated against. What's new?

I wonder how many of you have violated firm policy by giving tax advice just now...

2:29, or ethics legal advice. Better put your firm's insurance carrier on notice.

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IRS Circular 230 disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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I was under the impression that Paul Hastings matched, or at least had an automatic contribution. Am I correct?

Quinn has a profit-sharing plan that amounts to ~3-4% of your annual compensation (salary + bonus) being automatically contributed to your 401(k) in March or April.

Fully vested. It's pretty sweet.

12:56, the 15,500 401(k) limit comprises normal 401(k) and Roth 401(k)--i.e., it's a zero sum game. Unless you are in a particularly unique situation, it makes no sense to put any of that 15,500 into the Roth 401(k), which requires you to pay taxes on it now in exchange for saving taxes at the time of withdrawal. The normal 401k is the opposite--you save the taxes now. Unless you have circumstances that lead you to believe you will actually be in a higher tax bracket after retirement than you currently are (making $160k), you should put all $15,500 in the traditional 401k. You can additionally put another $4k into a regular IRA (assuming you receive a bonus of at least $10k, you will blow through the $170k annual income limit for Roth IRA eligibility).

Heller Ehrman matched until the first salary bump.

Yeah, but they only matched up to $6k a year, and even then it didn't vest at all until you had been there for 5 years. So it was like a tax-free $30k (plus dividends and growth) retention bonus paid to rising 6th year associates. Nice, but not a big enough incentive to keep you for six years if you didn't want to be doing that anyway.

K&L Gates contributed 2% of gross whether or not the associate contributed, paid to all who had been with the firm for a full year and were still employed as of Dec 31. However, the contribution was paid sometime in the Spring, usually March.

As 2:02 said, the reason given for deletion of this benefit is that they are moving to a defined benefit plan for partners and they could not do both under IRS regs.

They also moved bonuses from December to January this year (date not yet set), and are pushing payroll out a week starting in January to the PGE payroll schedule of 7th and 22nd instead of the current K&LNG schedule of 15th and 30th which will add a week of accrued payroll to their cash flow. Maybe this means K&L will actually pay decent bonuses for once.

The nice thing about a December bonus payout is that you can leave and go to another firm without prorating your next bonus year. I think this is one reason (among others) that most firms don't pay them out until January or (worse, in my case) February.

Reed Smith and KL Gates are basically mirror images of one another. The good thing about having your main office in Pittsburgh is that the support staff is essentially being paid at out-sourced-to-India prices .... more money for the partners.

And $1.1M/year in Pittsburgh has you lighting cigars with $100 bills as you sit in your 10,000 sf house ....

Womble Carlyle matches 401(k) contributions (up to 6%) and has a profit sharing program which deposites a % of your base salary into your 401(K). The profit sharing is somewhere around 5% of your base, I think.