how does employer match work

Employer Match Explained

Employer Match is a contribution made to your retirement plan by your employer and is dependent on your contributions to your plan. In our latest episode of Technical Tuesdays, Kim Scott, CFP®, explains what an employer match is, and how you could be able to take advantage of it!

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Employer Match transcription

Welcome to Technical Tuesday from Financial Services Advisory! I’m Kim Scott and I’ll be your host today. Today our topic is explaining an employer match.

Now typically when you work for a company, they offer some sort of retirement plan. This can be a 401(k), a 403(b), a TSP – there’s a number of different types, but often employers offer those and sometimes they contribute to those accounts as well.

A match is when their contribution is dependent on your contribution. You put something in, so then they put something in. That can look a lot of different ways depending on your employer.

For example, they may do a dollar-for-dollar match up to a certain percentage of your salary. In other words, you put in, let’s say 3%, they match you up to 3% of your salary.

Another example is they may match a portion of your contribution. Let’s say they match half of your contribution up to, or until your contribution reaches 6%. So in the end, you have to contribute 6% to get their 3% match.

No matter the situation, you really want to make sure that you’re maximizing your employer contribution into your 401(k). As they say, that’s free money, and you want to take advantage of it as much as possible.

Be sure to talk to your employer about what they offer as far as match goes so that you can be sure to maximize yours.

Now we have these conversations all the time with our clients, so if you have additional questions or want to talk through your situation, feel free to give us a call or email us.

For now, I’m Kim Scott, and this has been Technical Tuesday!

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