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Retirement Planning

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Employer Matching Program

An employer's potential additional payment to an employee's 401(k) plan contingent on the extent of an employee's participation in the plan.

Example: A popular employer matching program is "50% of the first 6%." This means that for every dollar an employee contributes to the 401(k) plan, the employer adds 50 cents. Once the employee reaches contributions equaling 6% of gross pay, employer contributions cease until the following year.

Note, however, that if the employee does not contribute at least 6% of salary to the 401(k) plan, the worker forfeits additional compensation from the employer.

Not every 401(k) plan has an employer matching program.

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