Worked example: $85K salary, 50% match up to 6%
Contribute the full 6% ($5,100) and the employer adds $2,550 — a 50% instant return. At 7% growth over 30 years, those annual matches alone accumulate to about $241,000. Contribute only 3% and you collect $1,275 per year instead; the unclaimed $1,275 annually compounds to roughly $120,000 of forfeited retirement money.
- • Vesting matters: a 4-year graded schedule means leaving at year 2 keeps only 50% of the match.
- • Match dollars are always pre-tax into a traditional 401(k), even if your contributions are Roth.
- • Some plans true-up annually — if yours doesn't, front-loading contributions can cost you match.
FAQ
What is a good 401(k) match?
The most common formula is 50% of the first 6% (worth 3% of salary). Anything at or above 100% of the first 4–5% is generous. Treat the full match as part of your compensation — not collecting it is a pay cut.
Does the employer match count toward the limit?
No. The employee deferral limit (about $24,500 in 2026) is yours alone. Employer matches count toward the separate, much higher total-additions limit (~$70K).
What happens to my match if I quit?
Your own contributions are always 100% yours. The match follows the plan's vesting schedule — cliff vesting (0% until 3 years) or graded (20%/year from year 2). Check your plan document before timing an exit.
Should I contribute beyond the match?
Usually yes, after capturing the full match: pay high-interest debt, build an emergency fund, then favor the 401(k) up to the limit or split with a Roth IRA depending on your tax outlook.
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