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The 401(k) Employer Match

Matching means that based off on your employer’s guidelines, they will contribute money into the 401(k) on top of your contribution. This may be every paycheck, twice a year or once a year as it is based on their discretion. To review a typical plan, suppose your employer says they will match dollar for dollar, up to the first 5% of your salary for the year.

If your salary is $75,000 your employer will match up to $3,750. ($75,000 x .05) This does not mean that your employer will automatically match the $3,750. It is only if you contributed the full amount, otherwise they will match dollar-for-dollar any amount below $3,750.


Read the employer's plan provisions for full details. If you can participate in the 401(k) try at least to contribute the minimum amount to receive the matching contribution. This is free money! We repeat this is free money! How often do you hear this? Go and get it.



Your employer may have policies that affect your participation in the plan. It is common to see an eligibility period with restrictions that may allow you to participate in the plan. For example, they may say that you have to be a full-time employee with at least six months of service before participation can begin. On the other hand they may allow you to start on contributing on your first day of employment. Every employer has their own set of rules.   

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