What is the employer match?


When you put money from your paycheck into your 401(k), your employer may also contribute money to your account. This is a called a “match” or “employer contribution.” You should always take full advantage of an employer match. It's free money! The more you save, the more you’ll get from your employer. Contribute at least enough to qualify for your employer’s maximum matching contribution.

First, find out the basics of your employer matching program:

  • Does your employer offer a match? Not all do.

  • Is there a waiting period until you are eligible for the match? You may have to work there for six months or a year until it kicks in.

  • What is the matching formula? In other words, what percentage of your own 401(k) contribution will your employer match? Most commonly it is 50 cents for every dollar you contribute, up to a maximum of 6% of your pay. 

  • How much do you have to contribute to qualify for the match? Many plans require you to contribute a certain percentage of your pay in order to receive the maximum match.

  • When do you vest? In other words, how long until your employer's matching contributions are yours to keep? Some employers require you to be with the company for several years before the money becomes your own.

Learn more about how the employer match works:

* This illustration is a hypothetical compounding example that assumes biweekly deferrals (for 30 years) at a 7% annual effective rate of return. It illustrates the principle of time and compounding. It is not intended to predict or project the investment results of any specific investment. Investment return are not guaranteed and will vary depending on investments and market experience. If fees, taxes, and expenses were reflected, the hypothetical returns would be less.