Most traditional strategies dictate that a client should first contribute to an employer-sponsored 401(k) to the extent needed to gain the benefit of a full employer matching contribution
. Despite this, clients (especially those in higher tax brackets) should reconsider the savings potential of an HSA both currently and down the road.
For example, the elimination or reduction of an employer matching contribution
can never be solely in the interest of participants and beneficiaries.
o 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.
However, here are some common benefits in traditional packages, a partially paid health insurance plan, a 401(k) investment program (where the employer may or may not have an employer matching contribution
), life insurance, paid time-off (vacation, holiday and sick leave), disability insurance, maternity leave, etc.
American employees are familiar with the concept of an "employer matching contribution
." This is the amount an employer contributes to its employees' defined contribution plan accounts--typically 401(k) in the private sector--expressed as a proportion of each employee's contribution.
The terms of the Company's 401(k) retirement savings plan allow for a discretionary employer matching contribution
. In the past, this has allowed the Company to provide a meaningful employer matching contribution
to employees who have contributed money from their paychecks to the Company's 401(k) retirement plan.
Employer matching contributions
. A firm has considerable flexibility under a qualified plan to structure the employer matching contribution
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.
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.
The employer matching contribution
can be reduced to as low as 1%, but only for two years during a five-year period.