What Are the 401k Employer Matching Limits?

401k employer matching is one of the most attractive features of this retirement plan. When you work for an employer, they can choose to match your contributions up to a certain amount. This essentially amounts to free money for your retirement.

Every company can choose to set specific limits on their own contributions. They might have a dollar for dollar match up to a certain percentage of your contributions. Some companies like to contribute half of what you contribute.

Regardless of how much a company wants to contribute to your 401k, they can only contribute a maximum of 6% of your annual pretax income to the account.

In addition to the rule of 6%, they also have to stay within a total contribution of $49,000 between employer and employee contributions. Between the 2 different types of contributions, you cannot have more than 100% of your annual salary going into the account.

Just because companies are allowed to contribute as much as 6%, that does not necessarily mean that they will. Many companies will only contribute a maximum of 4 or 5% depending on how much you contribute. If you want to max out their contribution, you need to max out your own also.