What Is "Matching?" Why Is It So Important?

What is a "matching" program?

An employer match is essentially a company program that gives you bonus money towards your retirement. Your employer will “match” the money you save in your 401(k) up to a certain percentage of your paycheck.

Think of it this way. If your employer offered to pay you 5% more a year, you’d take it. Make sure you get all of the money you’re entitled to and save enough of your paycheck to get the full match!

How does it work?

Let’s say your employer matches "up to 5%" of your 401(k) contribution. In this example, you made $100,000 in 2016.

If you put 6% of your paycheck ($6,000) into your 401(k) in 2016, your employer would “match” your contribution and give you 5% of your paycheck ($5,000) towards your retirement. So you'd end up with $11,000 saved in your 401(k) in 2016. You only get $5,000 from your employer because their maximum match is 5%. 

Don't miss out on any free money!

It’s free money! It’s potentially thousands of dollars a year in extra salary. Think about the example above. If your boss offered to pay you $5,000 more a year, you’d say yes! Well, the match is similar to a salary bump or bonus.

Your employer may not offer a match - log into the Dream Forward website or talk to your HR department to learn if your company offers a match. There may also be a waiting period (e.g., six months, one year, etc.) before you’re entitled to the company matching program.

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