401k Matching: Your Guide to Employer Contributions & Retirement Savings

401k plans are one of the most common investment vehicles that Americans use to save for retirement. One common perk of these plans is that they may come with an employer match.

Learn More: What is a 401k? – A Comprehensive Guide

What Is 401k Matching?

For most employees, a defined contribution plan is one of the primary benefits offered by their employer, with a 401k being the standard employer-sponsored retirement plan used by for-profit businesses. Employer matching of your 401k contributions means that your employer contributes a certain amount to your retirement savings plan based on the amount of your annual contribution.

Learn More: The Average 401k Balance By Age

Similarly, some employers use 403b or 457b plans. While there are some minor differences between these plans, they are generally treated in a similar manner, and they usually have the same maximum contribution limits. The type of plan is based on the type of entity:

• 403b plans are used by tax-exempt groups, such as schools or hospitals
• 457b plans are for government workers, although there are some non-governmental organizations that also qualify to use these plans

Whether you’re on your first job or are thinking about retirement, here are a few considerations to keep in mind when offered an employer matching your 401k contributions.