A 401(k) match is the amount or percentage of money your employer contributes toward your retirement account, in addition to your own contributions. If you work for a company that offers this benefit, you can take full advantage of this perk to help maximize your savings.
Most employers offer their employees the opportunity to contribute to a 401(k) to grow their money for post-retirement use. A 401(k) is the standard employer-sponsored retirement plan used by for-profit businesses.
A 401(k) match can be one of the greatest benefits a company can offer its employees — helping them grow their retirement savings over time. And a larger annual contribution could make all the difference when it comes to compound interest.
Typically, the money that you put toward your 401(k) plan is a percentage of your salary or an identified amount that you choose to be taken out of your paycheck before tax deductions are made.
Note that there are required contribution limits and withdrawal regulations imposed by the Employee Retirement Income Security Act (ERISA); however, the sponsoring employer ultimately decides the specific terms of each 401(k) plan.
No matter how much you choose to put toward your 401(k), most companies offer some kind of match to those funds. Every company’s program operates differently, as some offer full or partial matches. Let’s explore more of how matching contributions work and how you can make the most of this benefit to advance your savings goals.
How does a 401(k) match work?
For a 401(k) match, employees usually set aside a percentage of their salaries for their retirement plan, and most employers who offer matching programs contribute a percentage of an employee’s contribution to their account. If your employer offers 401(k) matching contributions, it will match the percentage of your salary you elect to deposit into your 401(k) account, but only up to a certain amount.
Each 401(k) plan has different terms. Your employer may choose to match contributions dollar-for-dollar, offer a partial match (a percentage of your match), or will have other set limits that your plan’s documents will detail. Some employers may also make non-matching 401(k) contributions, but we’ll talk more about the different options in a little bit.
Employers aren’t required to match contributions, and regardless of the matching structure, your employer will likely cap your match at a certain percentage of your yearly salary.
Starting in 2025 under the SECURE 2.0 Act¹, new 401(k) plans created after December 29, 2022, will be required to automatically enroll eligible employees, with initial contributions set between 3-10% of their salary.¹ Then, they must make automatic increases of 1% each year until it reaches at least 10%, but not more than 15%.This automatic enrollment can be opted out of or you can change your contribution level,⁶ but it’s meant to increase retirement savings by making contributing the default.
401(k) vesting
Companies often have a vesting schedule that determines when you get to keep the funds contributed to your plan by your employer in the event you leave the company. Immediate vesting means you get to keep all your employer’s contributions to your 401(k) as soon as you earn them, but this is rare.
Since it may take several years to earn your employer’s matching contributions, employers use vesting schedules to incentivize employees to stay at the company and think twice before they switch jobs. When you complete this proposed schedule, you are said to be “fully vested.” Every company has its own matching methodology and vesting rules, so talk to your employer if you’re not sure how your particular 401(k) match works. Remember, your own contributions are always 100% vested.
You usually sign up for your 401(k) program through your employer during your onboarding phase or within the first few weeks of employment. When you start a new job, be sure to check to see if your new employer offers a 401(k) plan, and if they do, find out when you can sign up and start to participate. Be sure to take the time to learn the terms of the program, though, as being prepared is super important when it comes to sticking to the financial plan you’ve set for yourself.
What Is the average 401(k) match?
A 401(k) match is when an employer contributes money to an employee’s retirement account based on the employee’s contributions. The most common match formula is a dollar-for-dollar match on the first 3% of the employee’s salary, and then 50 cents on the dollar for the next 2%. On average, employers contribute 4.8% of an employee’s salary as a 401(k) match or profit-sharing contribution. To maximize the match, employees should contribute enough to receive the full employer contribution. Ideally, employees should aim to save 15% of their pre-tax income for retirement, including the employer match.⁴
| Employer match type | Example | Your annual contribution | Your employer’s annual contribution | Total annual contribution |
|---|---|---|---|---|
| Single-tier formula | $0.50 per dollar on the first 6% of pay | $3,000 | $1,500 | $4,500 |
| Multi-tier formula | $1.00 per dollar on the first 3% of pay; $0.50 per dollar on the next 2% of pay | $2,500 | $2,000 | $4,500 |
You should know that any money your employer puts into your 401(k) as a match does not count toward your personal yearly contribution limit of $23,500. However, there is a maximum amount that you and your employer can contribute together. For 2025, this combined total from you and your employer cannot go over $70,000. If you are age 50 or older, you can contribute more, so the combined limit for you and your employer is $77,500.⁴
Again, since not all companies offer a match to their employees, finding a job that has one as part of its benefits package is a pretty big deal. After all, a 401(k) match is essentially free money — and it’s money that could make a huge difference in your ending balance when you are close to retirement. Just make sure you ask your employer whether they automatically match your contributions, because not all employers will tell you.
Types of matching programs
As mentioned above, there are a few different matching programs a company can offer, and each program has its own terms to consider. Here are 3 of the most common matches:
1. Partial 401(k) match
A partial 401(k) match is when an employer will match a percentage of the money an employee puts into their account, up to a certain amount of their annual salary.
The most common partial match that you may have heard of is $0.50 on the dollar, for up to 6% of an annual salary. You can’t get more than 3% of your total salary, but your employer matches half of your contributions up to that.
For example, let’s say you make $80,000 per year, and you contribute 6% of your salary to your 401(k), which is $4,800. The employer will offer a 50% partial match, which would be $2,400, boosting your total amount invested for the year to $7,200.
2. Dollar-for-dollar 401(k) match
A dollar-for-dollar match, also known as a full match, is when an employer’s contribution equals 100% of the employee’s contribution, and the employee’s total contribution for the year is capped at a specific percentage of their annual salary.
If your employer offers a full match up to 5%, this means if you contribute 5% of your salary, you’ll be matched that amount fully in contributions to your 401(k). However, if you decide to contribute 6% of your salary, your employer will still only give 5%, since that is the determined max.
3. Non-matching 401(k) match
Also referred to as a “profit-sharing” contribution, a non-matching 401(k) contribution is when an employer makes a contribution to an employee’s 401(k) regardless if that employee makes any contributions of their own. Employers will usually base how much they give in non-matching contributions on specific factors such as the company’s annual profit or revenue growth.
Like most other 401(k) matching programs, a non-matching contribution has a cap based on a percentage of an employee’s salary. For example, your employer could determine a non-matching contribution of 4% of your yearly salary. This would be paid in only if you meet predetermined goals.
Contribution limits
You might be wondering if an employer match counts toward the 401(k) contribution limit. Whether the contributions to your 401(k) come from you or from employer matching, all matching contributions from an employer or deferrals must adhere to an annual contribution limit enforced by the Internal Revenue Service (IRS). A deferral is an expense that has been prepaid. In other words, it’s a payment made or received for products or services not yet provided.
The 2025 annual limit for the maximum you can contribute to your 401(k) from your own salary is up to $23,500, or up to $31,000 if you’re 50 or older. These limits are updated regularly, and the announcement of the next year’s limit is usually in October or November.
For employees aged 60-63, SECURE 2.0 increases the annual catch-up contribution limit starting in 2025. Those in this age range can contribute up to $10,000 in additional catch-up contributions, or 150% of the regular catch-up amount, whichever is higher. This is in addition to the 50+ catch-up contribution limit, not instead of that limit.
How to maximize your 401(k) match
Retirement might feel a long time away, but you’ll want to work toward having as much as possible saved or invested for when you’re ready to stop working.
There are several ways to improve your strategy to maximize your retirement fund. Taking advantage of your employer’s 401(k) program and its matching opportunities is the best place to start. Here are some keys to maximizing your match.
Try for the full match. Ideally, contribute enough to get the full employer 401(k) match. However, this may not always be possible due to personal financial situations. Budget wisely to get as much of the match as you can.
Know your employer’s vesting schedule. Employers use vesting to keep employees. That means you must stay for a set time to keep the full match amounts they make to your 401(k) to be “vested.” For example, your employer may offer 100% vesting after 3 years, but none if you leave before that. You always get to keep all you contribute, though.
Understand their matching schedule. Note when your employer makes matching contributions. Some do it each paycheck, others annually. Maxing out contributions too early in the year could cause you to miss out on later matching funds that year if your employer makes matching contributions per paycheck.
Choose matching for your Roth 401(k). Starting in January 2025, SECURE 2.0 requires employers to make Roth 401(k) matching contributions, if you choose.
Know when matching stops if you’re highly compensated. IRS income limits—based on your prior year’s earnings—don’t allow top-earning employees to get the full employer match.
Save beyond the employer match. Aim to save 15% of pre-tax income annually for retirement, including employer contributions. If your employer match is 6%, contribute an additional 9% yourself to reach that 15%.⁴
Whatever strategies you choose to get the most from employer matching, be sure to start making 401(k) contributions as soon as possible at your current job or when starting a new one. As we said above, the SECURE 2.0 Act requires employers to automatically enroll eligible employees into new 401(k) plans starting in 2025. So, you won’t miss out on getting the benefits of having a 401(k) plan. This requirement only applies to employers with 10 or more employees, though.⁶
FAQs
When is the year-end date for a 401(k) match?
The 401(k) contribution deadline is at the end of the calendar year and resets on January 1. Any contributions and matches made during the year (up until December 31) count toward your total contribution limit.
Your employer might choose to deposit its match each time your contribution is deducted from your paycheck, or it may deposit it on a quarterly or yearly schedule. However, the IRS allows contributions to IRA accounts up until the tax filing deadline of the coming year. For the 2025 tax year, you can contribute to your IRA accounts until April 15, 2025.
What is considered a good 401(k) match?
Generally, a good 401(k) match is any amount at or above 3.5%, the average last reported by the BLS. The best 401(k) match would be a 100% match up to the allowable limits since it would match any dollar you invest in your 401(k).
However, any match is considered good since it represents a risk-free return on investment and can be viewed as “free money” that you wouldn’t have otherwise.
Can I receive an employer match to my Roth 401(k)?
The short answer is yes. The long answer is that when employers make matching contributions to a Roth 401(k), the money goes into a separate traditional 401(k) account, not into the Roth account. The IRS states that you must pay regular income tax on all employer contributions when they are withdrawn. However, Roth 401(k)s usually aren’t taxed at all, as long as they are not withdrawn early. You’ll pay the taxes on the traditional 401(k) funds when you withdraw the money.
How does automatic enrollment impact 401(k) contributions?
Starting in 2025 under the SECURE 2.0 Act, new 401(k) plans created after December 29, 2022 will be required to automatically enroll eligible employees, with initial contributions set between 3-10% of their salary. This automatic enrollment can be opted out of, but aims to increase retirement savings by making contributing the default. Each year after automatic enrollment, the contribution rate must increase by 1 percentage point until it reaches at least 10%, but not more than 15%, unless the employee opts out or makes changes.