What is a 401k employer match?
When your employer offers a 401k match, they agree to contribute money to your retirement account based on how much you contribute. It's the closest thing to free money that exists in the working world. A typical match looks like one of these:
- Dollar-for-dollar up to 3%: You put in 3% of your salary, they put in 3%
- 50 cents on the dollar up to 6%: You put in 6%, they put in 3%
- Dollar-for-dollar up to 4%, then 50 cents on the dollar up to 8%: A tiered match
In every case, you need to contribute enough yourself to unlock the full match. If you're not contributing at least up to the match threshold, you're leaving guaranteed money behind.
Example: You earn $75,000. Your employer matches dollar-for-dollar up to 4%. If you contribute 4% ($3,000/year), your employer adds $3,000. If you only contribute 2%, you get $1,500 from your employer and miss $1,500 — every single year. Over 20 years with compound growth, that gap is worth over $80,000.
How to find your match rate
Your match formula is in your benefits documents — usually called the Summary Plan Description (SPD) or 401k Plan Document. Look for phrases like "employer contribution," "matching contribution," or "company match." It will specify both the match rate and the cap (the percentage of salary up to which they'll match).
If you can't find it, ask HR directly: "What is the full employer match formula and what percentage do I need to contribute to receive the maximum match?"
Vesting: when the money is actually yours
Many employers use a vesting schedule — meaning you have to stay at the company for a certain period before the employer contributions are fully yours. Common schedules:
- Immediate vesting: 100% yours from day one (best for employees)
- Cliff vesting: 0% until year 3, then 100% — common with 3-year cliffs
- Graded vesting: 20% per year from years 2-6, fully vested at year 6
Your own contributions are always 100% yours immediately, regardless of vesting. Only the employer contributions are subject to a vesting schedule.
The most common 401k mistakes
- Contributing below the match threshold: The single most expensive mistake. If your employer matches up to 6%, contribute at least 6%.
- Never increasing contributions after a raise: If your salary goes up but your contribution percentage stays the same, you might fall below the threshold
- Cashing out when changing jobs: Early withdrawal means income tax plus a 10% penalty. Roll it over instead.
- Ignoring the investment allocation: Being in the default target-date fund is fine, but understand what you're invested in
2026 401k contribution limits
For 2026, you can contribute up to $23,500 to your 401k. If you're 50 or older, you can add a $7,500 catch-up contribution for a total of $31,000. Your employer's match doesn't count toward your personal limit.
Calculate your 401k opportunity
BenefAgent's calculator shows you exactly how much uncaptured match you're leaving behind — and what it costs you over time.
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