A 401(k) employer match is one of the closest things to free money in personal finance: your employer contributes to your retirement account based on what you put in. Understanding the formula — and contributing enough to capture all of it — can add hundreds of thousands of dollars over a career. See it play out in the 401(k) calculator.
What an employer match is
When you contribute a percentage of your salary to your 401(k), many employers add a contribution of their own, up to a limit. It's part of your total compensation — but unlike salary, you only receive it if you contribute enough to trigger it.
Common match formulas
- 50% up to 6% — the employer adds 50 cents per dollar you contribute, on the first 6% of your salary. Contribute 6% and the employer adds 3% of salary.
- 100% up to 4% — a dollar-for-dollar match on the first 4% of salary. Contribute 4% and the employer adds 4%.
- Tiered — e.g. 100% on the first 3% then 50% on the next 2%, for a maximum 4% match at a 5% contribution.
In the calculator you enter the employer match as a percent of salary; it applies up to what you contribute, because an employer never matches more than you put in.
Getting the full match
The key rule: contribute at least enough to earn the entire match. If your plan matches up to 6% and you only contribute 3%, you're leaving half the match — real compensation — on the table. Raising your contribution to the match threshold is usually the highest-return move available, since it's an immediate, guaranteed addition before any market growth.
How it compounds
The match matters most because it compounds for decades. Example: starting at age 30 with $25,000 saved, a $70,000 salary, contributing 6% with a 4% match, a 7% return and 2% annual raises, the balance grows to roughly $1.6 million by age 65. A large share of that is the employer match plus the growth it earned — money you never would have had by contributing alone. Compare lump-sum growth in the compound interest calculator.
FAQ
What does "50% up to 6%" mean? The employer matches half of what you contribute, but only on the first 6% of your salary — so the most they add is 3% of salary, and you get it by contributing 6%.
Is the match ever taken back? Matched funds can be subject to a vesting schedule, meaning you earn full ownership after a set number of years. Your own contributions are always 100% yours.
What return should I assume? Long-run stock returns have averaged around 7% after inflation, but they vary year to year. Test a range rather than trusting one number.
Is my data private? Yes — all projections run in your browser and nothing is uploaded.