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. 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.
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.

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