Does Your Employers 401k Plan Match Up?

Investing in a 401k plan can provide you with a great way to save for retirement. One of the biggest benefits of this type of plan is that your employer has the ability to match your contributions. Here are a few things to consider about the employer match of a 401k plan. 

How It Works

Employees are allowed to make contributions on a pretax basis out of their paychecks into a 401k. The percentage that they can contribute is regulated by the rules of the 401k plan. In most cases, employees are allowed to contribute as much as 15 percent of their income. The employer then has the right to match the employee's contribution up to a certain percentage. This is a discretionary match--the employer can decide whether they want to contribute. In many cases, the employer will match half of what the employee puts into his or her account. 

Rules

There are a few rules that the employer has to go by when it comes to matching contributions. First of all, between the employee and the employer match, the total amount cannot exceed 100 percent of the employee's salary. In addition to that, the employer cannot contribute more than $49,000 in a single year to their accounts. 

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