Here’s a personal finance truism: if your employer offers a 401(k), be sure to take advantage of any matching funds. That’s a terrific idea, but what if doing so presents an ethical dilemma? Eric wrote looking for advice on a sticky situation:

My employer is moving our 401(k) accounts from one investment firm to another. The new investment house is condemned by human rights groups because their investments facilitate the genocide in Darfur.

What am I to do? I feel very strongly about human rights issues, and my knee-jerk reaction is to reject the (generous) 401(k) plan completely. I understand this will cost me dearly, but I must be able to face myself in the mirror. Surely other people are faced with the same dilemma. What have others done in situations like this?

I’ve been thinking about Eric’s situation for days, but I haven’t been able to arrive at a good answer. There’s only one compromise that makes sense to me:

  • Contribute to the 401(k) in order to take advantage of the full employer match.
  • Route all other retirement savings through alternative accounts, such as an IRA.
  • Make a large contribution to an organization working to help the people in Darfur.

Have any of you faced this kind of decision before? How did you resolve it? How do you think you would handle the situation if you did face it?

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