DayCents

401(k) Employer Match

An employer match is money your company adds to your 401(k) based on what you contribute — commonly 50% of your contributions up to 6% of your salary. It's an immediate, guaranteed return on your savings, which is why the near-universal advice is to contribute at least enough to capture the full match.

The cap on the employer's contribution matters more than the headline percentage. “100% up to 3%” and “50% up to 6%” pay identical employer money — $1,800 on a $60,000 salary — but the first asks $1,800 of you and the second asks $3,600. The only figure worth memorising is the contribution rate at which the match stops growing. Two rules can quietly take it back. Vesting: on a graded schedule, leaving at two years with $9,000 accumulated keeps $3,600 and forfeits $5,400. And per-paycheck matching without a true-up, where contributing fast enough to hit the annual limit early stops the match with it — a $200,000 earner front-loading can forfeit around $5,000.