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A 401(k) is a type of retirement savings plan that is sponsored by an employer. Some employers offer to match a certain percentage of the contributions that their employees make to their 401(k) accounts. This is known as a 401(k) matching contribution.
Here's how it works: let's say that your employer offers a 50% match on the first 6% of your salary that you contribute to your 401(k) account. This means that if you make $50,000 per year and you contribute 6% of your salary to your 401(k), or $3,000, your employer will contribute an additional $1,500 (50% of your contribution) to your account.
In this example, your total contribution to your 401(k) would be $4,500 (your contribution of $3,000 plus your employer's matching contribution of $1,500). This can be a great way to boost your retirement savings, as you are effectively getting free money from your employer to save for retirement.
It's important to note that employer matching contributions to a 401(k) account are subject to vesting. This means that you will not be able to take the employer's matching contributions with you if you leave the company before they vest. Vesting schedules vary, but they usually require you to work for the company for a certain number of years before the employer's matching contributions are fully vested and belong to you.
Here's how it works: let's say that your employer offers a 50% match on the first 6% of your salary that you contribute to your 401(k) account. This means that if you make $50,000 per year and you contribute 6% of your salary to your 401(k), or $3,000, your employer will contribute an additional $1,500 (50% of your contribution) to your account.
In this example, your total contribution to your 401(k) would be $4,500 (your contribution of $3,000 plus your employer's matching contribution of $1,500). This can be a great way to boost your retirement savings, as you are effectively getting free money from your employer to save for retirement.
It's important to note that employer matching contributions to a 401(k) account are subject to vesting. This means that you will not be able to take the employer's matching contributions with you if you leave the company before they vest. Vesting schedules vary, but they usually require you to work for the company for a certain number of years before the employer's matching contributions are fully vested and belong to you.