Employer matching contribution

Employer matching contribution

The amount, if any, a company contributes on an employee's behalf to the employee's retirement account, usually tied to the employee's own contribution.

Employer Matching Contribution

Money an employer offers to an employee's IRA or other retirement fund. Normally employers will offer an equal amount that the employee contributes up to a certain dollar amount or percentage of income. This is considered an employee benefit and allows a worker to save more (and accrue applicable interest) without enduring financial hardship.
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Adopt new approaches : Holding one-on-one and group employee meetings, offering an attractive employer matching contribution and implementing automatic features were identified as effective in terms of addressing plan challenges.
Some employers might think that contributing the full employer matching contribution would be a good start, but that won't cover employee needs in retirement, Eschtruth said.
It also provides comprehensive benefits including an employee savings plan with an employer matching contribution and flexible work arrangements such as a 35-hour work week and telecommuting options.
To be a qualified automatic enrollment feature, the plan must provide for either an employer matching contribution or a profit sharing contribution.
In the latter option, the employer contribution is a dollar-for-dollar match of an employee's pre-tax contributions up to 3 percent of compensation and a 50-cent match for each dollar of employee pre-tax contributions between 3 and 5 percent of compensation, for a maximum employer matching contribution of 4 percent of compensation.
This part of the discussion draws on a recent paper that I co-wrote that discusses the costs and benefits to firms of providing the employer matching contribution in company stock.
98-22 (which prescribes standard correction methods for plans availing themselves of the streamlined "Standardized VCR Procedure" (SVP) under VCR), the only authorized correction method for the improper exclusion of an employee from an elective 401(k) plan is for the employer to make a contribution to the plan on behalf of the employee equal to the "actual deferral percentage" for the group of either highly or non-highly compensated employees to which the employee belongs and to make additional contributions for any employer matching contribution or voluntary non-401(k) contributions that the employee could have made, on the same group-average basis.
Data from the 1993 BLS Employee Benefits Survey show that 29 percent of full-time employees in medium and large private establishments participated in a savings and thrift plan with an employer matching contribution, compared with 13 percent in deferred profit-sharing plans and 8 percent in money purchase plans.
Focus on making saving a simple and achievable goal Through the first two decades of your working life, make every effort to save the maximum allowed by a 401(k) plan, but be sure to at least set aside enough to get the employer matching contribution.
An investment in your employer retirement plan may be worth far more in tax savings and could earn you an employer matching contribution as well.
Client data indicates that combining automatic enrollment with an employer matching contribution helps drive an even better savings rate.

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