Salary FYI

Employer Match

Investing

A contribution made by an employer to an employee's retirement plan that matches a portion of the employee's own contributions, effectively providing free money for retirement savings.

## Employer Match

An employer match is an employer contribution to a retirement plan that is contingent on the employee also contributing. It is one of the most valuable compensation benefits available and should be a key factor in evaluating job offers.

### Common Match Formulas

| Formula | On $100K Salary |
|---------|------------------|
| 100% of first 3% | $3,000 max |
| 50% of first 6% | $3,000 max |
| 100% of first 6% | $6,000 max |
| Dollar-for-dollar up to IRS limit | $23,500 max |

### The "Free Money" Principle

Not contributing enough to receive the full employer match is equivalent to declining a pay raise. On a 50%-of-6% match, an employee earning $100,000 who contributes only 3% receives $1,500 in match instead of the full $3,000 — forfeiting $1,500.

### True-Up Contributions

Some employers offer a year-end "true-up" to ensure employees who front-load contributions receive the full annual match. Without a true-up, maxing out 401(k) contributions early in the year can cause missed match in later months.

### Global Equivalents

- **UK**: Employer pension contributions (minimum 3% under auto-enrollment).
- **Australia**: Superannuation Guarantee (12%, mandatory).
- **Germany**: Employer betriebliche Altersversorgung (occupational pension).