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Company Match

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Company Match

In the context of a 401(k) retirement savings plan, a "company match" refers to the contributions that an employer makes to match an employee's own contributions to their 401(k) account. The specific terms and conditions of the company match can vary from one employer to another, but it's typically expressed as a percentage of the employee's contributions up to a certain limit.

For example, an employer might offer a 100% match on the first 3% of the employee's salary that they contribute to their 401(k), and then a 50% match on the next 2%. This means that if an employee contributes 5% of their salary to the 401(k), the employer will contribute an additional 4% of the employee's salary (3% for the first part and 1% for the second part).

The company match is a form of employer-sponsored retirement savings incentive, and it essentially represents free money that can help employees build their retirement savings more quickly. However, there might be certain requirements or conditions attached, such as a vesting schedule that specifies how long the employee must work for the company before they gain full ownership of the employer-matching contributions.

Contribution limits for 401(k) plans are set by the Internal Revenue Service (IRS) and can change from year to year. Therefore, employees should check the most recent guidelines to make sure they are maximizing their contributions and employer match.

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