You’ll often hear that it’s smart to save for retirement year after year. Doing so could set you up with a nice nest egg that covers your expenses once you’re no longer working.

If you have access to a 401(k) plan through your job, you may be inclined to sign up for it. That might seem like your easiest route for building a nest egg. But if these things apply to you, then you may want to take a hard pass on that company retirement plan.

1. You don’t have any emergency savings

It’s a noble thing to want to set money aside for your future. But if you don’t have money in a savings account to cover unplanned bills in the present, then your focus should be on building yourself an emergency fund. Without one, you might land in costly credit card debt the next time an unexpected expense, like a home or car repair, arises.

Recent data from SecureSave finds that a whopping 63% of Americans don’t have enough cash in accessible savings to cover an unplanned $500 bill. So if that sounds like you, do yourself a favor and don’t fund your company 401(k).

Instead, take every dollar you’re not spending on essential expenses and put it into a savings account. You can then aim to start funding a 401(k) once you have enough money in the bank to cover a few months’ worth of bills.

2. You’re planning to leave your job as soon as you can

Moving money from a 401(k) into another retirement plan can be a bit of a hassle. In some cases, you may not be able to do a direct rollover, which means you’ll need to have a check mailed to you for your 401(k) balance and you then write a check to your new retirement plan.

When you leave a job, it’s generally a good idea to roll the funds from your old employer’s 401(k) into a new retirement plan — either the 401(k) sponsored by your new employer or an IRA. So if you’ve yet to contribute to your current employer’s retirement plan and hope to leave your job in early 2024, then you might as well hold off on funding that 401(k), especially if there’s no company match.

Remember, you do not have to fund a 401(k) evenly over 12 months. Let’s say you want to save $6,000 for retirement in 2024. That doesn’t mean you have to put $500 a month into a 401(k).

If you get a new job in April, you could put $667 a month into your new employer’s 401(k) over nine months and still meet your savings goal. But that way, you won’t have to deal with getting that money transferred over.

3. Your employer’s plan is crummy

Maybe your company doesn’t offer a match in its 401(k). And maybe that plan charges high administrative fees and has limited investment choices. That’s reason enough not to fund that 401(k) and instead turn to an IRA.

With an IRA, you may be looking at lower administrative fees, and you’ll generally be privy to a wider range of investment options. That could help you avoid investment-specific fees. Also, it could help ensure you’re building an investment portfolio you’re happy with.

One thing you should know about 401(k)s is that they generally do not let you buy individual stocks, whereas IRAs do. If you’re someone who likes to hand-pick your investments, that’s a good reason to choose an IRA. Plus, you’ll have your choice of brokerage firms that offer them.

The option to contribute to an employer 401(k) is certainly convenient. But if any of these reasons apply to you, you may want to steer clear of your employer’s 401(k) in 2024.

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