Employer Match for 401k

Employer Match for 401k

What is Employer Match?

Some employers match part or all of employee contribution to 401k to encourage retirement savings. This is an attractive benefit offered by employers. Employer contribution does not count towards $18,000 contribution limit for year 2015. But it does have its own separate limits. 

How does this work? 

Let's say, you will earn $100,000 as your annual salary for year 2015. In order for you to reach maximum employee contribution of $18,000, you will need to contribute at 18% to your 401k. Your employer has a 100% match to employee contribution (if you contribute 18%, your employer will contribute 18% as well).

Salary	$100,000.00
401K Contribution in percentage	18%
401K Contribution in amount	$18,000.00
Maximum Allowed for Employee Contribution for 2015	$18,000.00
Net Contribution to 401k by Employee	$18,000.00
Amount per paycheck (26 paycheck)	$692.31
Amount per paycheck (24 paycheck)	$750.00
Employer Match percentage	100%
Employer Match in Amount	$18,000.00
Net Addition	$36,000.00

In such scenario, if you contribute $18,000 to your 401k, your employer will contribute $18,000 to it.