Maxing out your 401(k) contributions to get the full match means having less disposable income. In some cases, it can put you short so that there isn’t enough money left over at the end of the month to live on.
For this reason, some employees simply can’t afford to take advantage of their company’s full 401(k) match. But a cash advance from Lendtable may be a practical solution for anyone who finds themselves in this position.
Keep reading to learn more about how Lendtable works and to decide if it could be a smart way to maximize your employer's 401(k) contribution.
Quick Summary
- Allows employees to max out their 401(k) match
- One-time service fee added to all loan distributions
- Loans paid back in installments or through vested 401(k) funds
Lendtable Details | |
|---|---|
Product Name | Lendtable |
Service | Cash advance loans for 401(k) matching |
Service Fee | 6% to 20% |
Minimum Credit Score | None (No Credit Check Required) |
Promotions | Variable and Fixed |
Who Is Lendtable?
Lendtable is a fintech that lends money to employees so they can get their company’s 401(k) match. The company is based in San Francisco and was founded in March 2020. The founders are Mitchell Jones and Sheridan Clayborne. Lendtable has raised $7.5 million through seed rounds.
“401(k)s, the primary vehicle most Americans depend on for retirement, are not only underutilized but free money, through an employer match, is constantly left on the table,” Jones said in a blog post.
Related: How To Set Up Your 401(k) On Your First Day Of Work
What Do They Offer?
Lendtable allows employees to take full advantage of their employer’s 401(k) match. This is done by providing a loan to cover the shortage needed to reach the match.
What Is A 401(k) Match?
A 401(k) match is free money from your employer (assuming it is offered). It is made available as part of your 401(k) plan. Not all employers offer a 401(k) and any match varies by employer. The average match is 3.5%. Some companies match up to 6%.
For example, if you make $50,000 per year and fund your 401(k) at 6% of your salary, you’ll have $3,000 in your 401(k) in one year. If your employer provides a maximum 3% match, you’ll get an extra ($50,000 x .03) $1,500 for a total of $4,500. This is called a 50% match with a 3% cap. The match does not count towards your 401(k) annual contribution limit.
Note that you may need to be at the job for some time before matching kicks in. Matching may even increase (from 1% to 3%) the longer you’re with the company.
You can set the amount of money to contribute to your 401(k). If you can only afford to contribute 4% of your salary, that means $2,000 of your money will go into your 401(k) and $1,000, or 2%, will be matched. In this case, you aren’t getting the full 3% match from your employer. That’s where Lendtable comes in.
Related: 5 Tips To Better Manage Your 401(k) To Invest And Build Wealth
How Does Lendtable Work?
Money that goes into a 401(k) is payroll deducted. That means it is pre-tax money, which is a requirement of 401(k)s. Lendtable can’t contribute to your 401(k). Contributions must come directly from your paycheck. So then, how is Lendtable able to fill the match shortage?
Lendtable provides employees with a cash advance that amounts to their match shortage. In the above example, the employee needs to contribute $3,000 per year to earn the full match. However, they are $1,000 short (i.e., a $2,000 per year contribution).
To fill the match shortage, the employee increases their 401(k) contribution from 4% ($2,000) to 6% ($3,000). Lendtable will loan the employee the additional $1,000. After you receive your company match, the loan is paid back in monthly installments along with a one-time service fee of 6-20%.
The employee can also choose to pay the loan back using vested funds from their 401(k). Taking money out of your 401(k) before age 59 does incur a 10% penalty. But Lendtable will cover the penalty. There will also be taxes on the withdrawn amount, but Lendtable says it structures loans in such a way that taxes are covered as well.
Related: How To Pull Your Money Out Of An IRA Or 401(k) Early And Penalty-Free
Are There Any Fees?
Yes — the lending rate ranges from 6-20% and is dependent on your 401(k) plan, salary, state of residence, and some other personal information.
In the above example, if you took a $1,000 loan, and the one-time service fee was 10%, you'd be paying back $1,100 - or $100 more than you borrowed.
How Do I Open An Account?
You can visit the Lendtable website to open an account. Anyone with a 401(k) company match is eligible to use the service regardless of how near or far away they may be from retirement. And Lendtable does not perform credit checks.
Is My Money Safe?
Yes - you are only taking out a loan. Lendtable does not interact with your 401(k) and no money is on deposit with Lendtable.
Is It Worth It?
Thankfully, the Lendtable loan fee is one-time rather than an ongoing interest rate. But a 6-20% service fee is still pretty hefty. It may be worth speaking to an accountant to work out the numbers. If the return on the company match outweighs the loan cost, it could be worth it.
But, in other cases, you may be better off just continuing to contribute what you can out of your normal budget. Keep in mind that you can still get a match from your company without maxing out your contributions. You just won’t receive the full match.
Also, there may be other ways to maximize your employer match without taking out a loan. Building multiple income streams and/or decreasing expenses are still the most tried-and-true ways to make room in a budget for higher retirement contributions.
Lendtable Features
Service | Cash advance loans for 401(k) matching |
Founder(s) |
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Service Fee | 6% to 20% |
Repayment Options |
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Minimum Credit Score | None (no credit check required) |
Maximum Loan | Amount needed to get full employer match plus any adjustments required to account for taxes on realized income |
Payment Options |
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Customer Service Number | None listed |
Customer Service Email | founders@lendtable.com |
Mobile App Availability | None |
Promotions | None |
Lendtable Review
- Pricing and Fees
- Ease of Use
- Products and Services
- Customer Service
Overall
Summary
Lendtable gives cash advances to employees to help them take full advantage of the employer match on their 401(k) plans.
Pros
- Can help employees avoid leaving “free” money on the table
- No credit check required
- Can repay loan in installments or from your 401(k)
Cons
- One-time cash advance fee of 6% to 20%
- New company with few customer reviews
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him on the About Page, or on his personal site RobertFarrington.com.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.