Matching contribution

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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 ?
Under current law, employers may only make matching contributions to a 401(k) retirement plan if employees are also making contributions.
Hargreaves Lansdown looked at the behaviour of nearly 53,000 workplace pension members to find out what impact employers offering additional matching contributions has on the likelihood of employees boosting the amount they pay in themselves.
Hargreaves Lansdown lookwed at the behaviour of nearly 53,000 workplace pension members to find out what impact employers offering additional matching contributions has on the likelihood of employees boosting the amount they pay in themselves.
For testing purposes, after-tax contributions are treated like matching contributions.
With matching contributions from private industry, the research effort will total more than $13 million, the release said.
The contingent benefit prohibition generally precludes a 401(k) plan from conditioning benefits (other than matching contributions) upon an employee's election to defer a percentage of his or her compensation to the plan in lieu of receiving that compensation as taxable wages.
We expect our operating ratio to improve again in 2018, although our employee benefit costs are expected to increase this year due to enhancements to our paid-time-off policy and larger 401(k) matching contributions. We have historically made a discretionary matching contribution to our 401(k) plan to increase our aggregate matching contribution to 10% of our net income, and we believe that this year's discretionary contribution will increase more than it would have otherwise due to a lower 2018 effective tax rate under the Tax Cuts and Jobs Act."
Instead of matching contributions of two or three per cent of earnings Asda would only match one per cent.
Employers who worry that automatic escalation increases the cost of matching contributions can help offset costs by customizing matching contributions to targeted employee populations, such as those nearing retirement age who have recently had their pension plans frozen.
If You Provide a Match, How Frequent Are Matching Contributions?
If a servicemember chooses not to participate in the TSP, or cannot afford to participate, they forgo matching contributions made by the DoD.
A report issued by Financial Engines, "Missing Out: How Much Employer 401(k) Matching Contributions Do Employees Leave on the Table?," estimates that Americans miss out on $24 billion in unclaimed 401(k) company matches each year.