What is a Good 401k Match?

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What is a good 401k match

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A 401(k) match is one of the tools that employers use to attract top talents and encourage current employees to stick around. Most companies offer this benefit both as a form of compensation and also as a benefits package.

If your employer offers a 401(k) match, it means that the company will match a percentage of your 401(k) contributions up to a certain percentage of your salary. But, how good is your company’s 401(k) match, compared to what other companies offer?

A good 401(k) match is considered to be 3% to 6% of an employee’s salary. So, if an employer offers a 6% dollar-for-dollar match, it means that the company will contribute an additional 6% of the employee’s eligible pay to their 401(k) account. But, an employee will need to contribute at least 6% of their eligible pay to qualify for the full match.

What is the average 401(k) match?

The average 401(k) offered by a typical plan is 4% of an employee’s salary. But, according to Fidelity, the actual overall employer 401(k) match goes up to 4.8% when considering the match employees get at each age.

Here is a breakdown of the 401(k) match that employers offer at various ages:

20-29: 4%

30-39: 4.6%

40-49: 5.0%

50-59: 5.2%

60-69: 5.2%

70+: 4.7%

The average of the above 401(k) matching contributions is 4.8%. The higher average is because most companies offer more generous matches to employees who have been with them for a longer time.

Additionally, some employers may offer a higher match of 5% and 6%, while others may offer a lower match of below 4%. Plus, the terms of the employer match, including vesting schedules and contribution matches can vary across companies.

What is the maximum 401(k) match?

The maximum 401(k) match that an employer can offer is not determined by any law but by the company’s financial capabilities. However, there are certain limitations provided by the Internal Revenue Service (IRS) regarding employer and employee contributions to 401(k)s.

For 2024, employees can contribute up to $23,000 to a 401(k), while workers over 50 can contribute up to $30,500. Be aware that employer contributions don’t count towards the employee contribution limits, but there is a cap on the combined employee and employer contributions. For 2024, the combined contributions limit is $69,000, or $76,500 for workers who are over 50.

What does 100% match on the first 3% mean?

If your employer offers a 100% match on the first 3%, it means that the company will match your 401(k) contributions dollar-for-dollar up to 3% of your salary.

So, if you earn $100,000 per year and you contribute 15% of your salary to your 401(k) account, it means you are contributing $15,000 to your 401(k) annually. In this case, your employer will offer a dollar-for-dollar match up to 3% of your salary, which is equivalent to $3,000 per year. In total, the combined contributions will be $18,000 per year ($15,000 employee contributions + $3,000 employer contributions).

How to make the most out of your 401(k) match

If your employer offers a 401(k) match, you should try to get the most of the “free money” to grow your retirement savings. Use these tips to get the full benefits of a 401(k) match:

Start contributing to a 401(k) early

About 70% of employers offer immediate 401(k) participation to new employees who join the company. However, about 20% of employers require employees to have completed at least one year of service to get the 401(k) match.

Don’t wait until you become eligible for a 401(k) match to start contributing. You should start contributing as soon as you join the 401(k) so that you start investing early to take advantage of the compounding effect.

Contribute enough to get the full match

You should save enough money in your 401(k) to get the full 401(k) match. Contributing less than is required to get the full match will mean that you are leaving free money on the table. If you are not sure how much is “enough”, discuss with your plan administrator to know how much you need to withhold from your paycheck to get the full match.

Understand vesting schedule

Employers use the 401(k) match to attract and retain top talents through a process known as vesting. Generally, while the 401(k) match is considered “free money”, it is not really free money until you have completed the vesting period. The vesting period, also known as vesting schedule, is the period when employees are required to stay with the employer to get the full match.

Employers may offer immediate vesting, cliff vesting, or graduated vesting. For immediate vesting, employees become 100% vested immediately after the 401(k) match is made. For cliff vesting, an employee isn’t vested until after a specified number of years, often 3 years when the employee becomes 100% vested.

With a graduated vesting schedule, an employee keeps a portion of the 401(k) match up to a certain period; for example, an employee could become 20% vested at the second year of service, increasing by 20% each year until they become 100% vested.

3 companies with the best 401k match

Many companies offer a generous 401(k) match and a reasonable vesting schedule. Here are a few companies that offer the best 401(k) match:


Edmunds is an online resource for automotive information, including car reviews done at the company’s facility. It also offers price verifications and vehicle listings for new and old vehicles. Workers employed at Edmunds enjoy various benefits, including a generous 401(k) match. Edmunds offers a 100% match for employee contributions up to 6% of their eligible pay.


Visa facilitates digital payments across over 200 counties and territories among consumers, merchants, and financial institutions. It implements these services using a variety of debit cards, credit cards, and prepaid cards. Visa employees receive one of the most attractive benefits, including a 200% company match, up to 5% of eligible. For example, if you contribute 5% of your eligible pay to your 401(k), Visa will contribute an additional 10% of your eligible pay, for a combined match of 15%.


Uber, the popular rideshare company, has a huge network of drivers across the world, and full-time employees who work in the United States, and across the world. Eligible US-based employees receive a dollar-for-dollar match up to 10% of the eligible salary. So, if you contribute 10% of your eligible pay to your 401(k), Uber contributes an additional 10% to your 401(k) plan, for a total of 20% of your pay. There is no vesting period, and you get to own the full match immediately.


Is a 6% 401k match good?

Yes, a 6% 401(k) match is considered a good match. It means your employer will match contributions to your 401(k) up to 6% of your eligible pay. It is also above the average 401(k) match of 4% for most companies.

Is 7% 401k good?

Yes, a 7% 401(k) match is considered quite good and it is above the typical 401(k) match average of 4%. If your employer offers a 7% match, and you contribute 7% of your eligible pay to your 401(k), it means that your employer will contribute an additional 7% to your 401(k) account, for a total of 14% of your eligible pay.

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