The employer match

How it works

The plan document states the formula, and the two common shapes are a full match up to a percent of pay and a half match up to a higher percent. A worker who contributes less than the matched percent leaves part of the formula unused that year, and most plans do not let it be claimed later. Matched money may vest over time, which means a worker who leaves before the vesting date keeps only part of it, and the plan document states the schedule. The match counts toward the plan's total yearly limit, $72,000 (2026, verified on the official page), which is separate from the worker's own limit of this year's official 401k elective deferral limit (not yet verified here; see the official source below). HR or the plan administrator can print the formula and the vesting schedule on request.

What it gives

The match is pay that has already been budgeted by the employer and arrives the day the contribution does.

It grows inside the plan with the same tax treatment as the worker's own money.

A worker can usually change the contribution percent at any time through the plan's website.

What it costs, or where the catch is

Matched money that has not vested is forfeited when a worker leaves, and vesting schedules run up to six years.

The match lands in the plan's fund menu, which may carry higher fees than funds available elsewhere.

A plan that matches per paycheck can leave money unclaimed when a worker hits the yearly limit early in the year, unless the plan has a true up.

A worked example

Maya earns $52,000 and her plan matches half of what she puts in, up to 6 percent of pay. She contributes 6 percent, which is $3,120 a year, and her employer adds half of that, $1,560. Her coworker Tom contributes 3 percent, $1,560, and receives $780. Over the year Tom leaves $780 of the formula unused, and if both keep this up for ten years at a 7 percent return, the difference in employer money alone comes to about $10,800, since $780 a year for ten years at 7 percent grows to roughly that figure.

Where it goes wrong

The most common miss is contributing a round percent that happens to be below the matched percent, year after year, without ever reading the formula.

Who confirms it for you

For your own numbers, the plan administrator or HR. This page explains how the rule works for people in general; it does not know your situation and does not tell you what to do.

The official source

IRS: 401(k) plan overview. Every figure that changes by year comes from the site's rules table, which the watcher checks against the official page on a schedule; where a figure is not yet verified, this page says so instead of printing a number.