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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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.
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.
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.
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.
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.
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.
The employer matching contribution can be reduced to as low as 1%, but only for two years during a five-year period.
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.
The most popular feature was an employer matching contribution of up to 5% of the employee's salary, with strong appeal for 31% of the workers sitting on the sidelines.

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