401K question

I need some advice. I currently make 52,346.66 a year. My current employer offers a 401K with a 50% match up to 10,000.00. Meaning the most they will give me per year on a match would be 5,000.00. However I only get 20% vested each year. So If I were to leave the comapny I can't take it all until my 5th year of service here. Currently I contribute 3% of my salary which was roughly 65 per paycheck 130 per month before my increase. I'd love to contribute the max but I dont think i can afford it, and I am not sure if it's worth it since I cant take the match if I leave before 5 years. I do own a home and have a mortgage and other expenses, but I am single with not a lot of debt. I'd like to have a savings. For me to do the max would be about 416 per pay check. That would be alot of money. If I do that, would I see a significant increase of a tax refund from the IRS come tax filing time? I own a home and get those deductions, so I get an average about 6,000.00 back a year. I am also 27 years. Any advice would be great

What exactly are you asking? Should you take full advantage of the free match from your employer and the tax break? Yes. You said it would be hard to max however, so the choice is yours ultimately.

Your tax break should basically be the amount you contributed before taxes, multiplied by your tax rate.

That 20% vested is the employer's match, not your contribution. If you do not plan on staying there for five (5) years, take that into consideration.

wow...50% match is pretty good...my company only matches up to 3%

Giacona,

Your employer's plan is generous. You should find a way to budget a larger contribution to the 401k plan.

As you indicate, your contributions are tax deferred, and your employer is going to match half of what you contribute.
Do not be concerned with the vesting. So you leave after 2 years of employment there, and you can only take 40% of the employer's matching contribution. You are still ahead of the game.

As for getting $6,000 refunded from the IRS, that is too much to be giving up througout the year. If you increase your contribution to the 401k, this amount will increase!!
You should go to the IRS withholding calculator and do some what-ifs. Then submit a new W-4 to payroll and reduce your withholding.
http://www.irs.gov/individuals/article/0,,id=96196,00.html

As for your debt, you should write down every penny you spend for about 2 months. Then you can see where you are spending, and what you can do without. Next put together a good budget, and follow that budget.
Here is a link to budgeting: http://www.crown.org/tools/budgetguide.asp

You should absolutely make getting the $5,000 max match from your company priority #1. That is FREE money. When in your life will you ever get an automatic 50% return on your money? Answer: NEVER! Also, I must agree with the previous writer who says getting a $6,000 refund from the IRS in insane. That doesn't the gov't is paying you $6,000 they owe you, its the gov't saying thanks for this interest free loan all year, here is your $6,000 back with no interest. By the way, $6,000 invested in a 5% savings account at a bank like HSBC.com would earn you $300/year in interest. Check your deductions on your W-4 to adjust so your having the proper amounts withheld from your paychecks.