Matching contribution

Matching Contribution

Money an employer offers to an employee's IRA or other retirement plan. 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.

Matching contribution.

A matching contribution is money your employer adds to your retirement savings account, such as a 401(k) or a SIMPLE.

It's usually a percentage of the amount you contribute up to a cap that the employer sets, such as 50% of your contribution up to 5% of your salary. The matching amount and any earnings are tax deferred until you withdraw them from your account.

In most plans, employers are not required to match contributions, but may do so if they wish. Employers also determine, within federal guidelines, how long you have to work for the company in order to be fully vested in the matching contributions.

References in periodicals archive ?
According to a recent Callan survey, 19 percent of plan sponsors either reduced or eliminated their company's matching contribution in 2009.
VENTURA -- A Ventura County display of photographs and information in the state Capitol is being upgraded under a $20,000 project funded by Ventura County and a $10,000 matching contribution from the Meissner Filtration Products Co.
To be a qualified automatic enrollment feature, the plan must provide for either an employer matching contribution or a profit sharing contribution.
According to the proxy, the increase included a $10,953 401(k) plan matching contribution, $297,096 deferred compensation credit for matching contributions that could not be made to the 401(k) plan, $900,826 reportable earnings on deferred compensation and $2,832 paid for life insurance.
While cutbacks in company matching dollars have been widely reported, and occasionally blamed for the drop in participation, the survey found that the vast majority of employers have made no change in the level of their matching contribution.
have raised over $11,000, including a matching contribution from the firm, for a woman whose relatives were killed in Kosovo.
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.
A 401(k) plan satisfies the ACP discrimination test safe harbor if it meets all of the following: 1) the contribution and notice requirements of the ADP safe harbor discussed below; 2) the 401(k) plan does not match deferral contributions or employee after-tax contributions in excess of six percent of a participant's compensation; 3) the rate of matching contribution for any HCE does not exceed the rate of matching contributions for a non-HCE; and 4) the level of the matching contribution does not increase as the participant's deferral contributions or after-tax contributions increase.
You know your audience, and you're an old hand at announcing changes in medical deductibles, expanded dental benefits, and increases in the company's matching contribution to the 401(k) plan.
Employer contributions and vesting: In addition, to avoid the nondiscrimination tests, the employer must make either a matching contribution or a nonelective contribution on behalf of each non-HCE.
The maximum matching contribution will be 6% of base pay for 2007 and 2008 and 5% of base pay for 2009 and thereafter.