A 401(k) plan is one of the most convenient ways to stash away dollars for retirement.
Funds contributed to the account can be deducted from your taxable income that year, and you can grow your savings over time with savvy investments. But perhaps the biggest motivator to contribute to a 401(k) plan is an employer’s 401(k) match.
Many firms offer to match employee contributions to the 401(k) plan. Typically, the employer contributes a certain amount to the employee’s 401(k) plan based on formulas and policies set by the company.
[READ: How Much Should You Contribute to a 401(k) in 2024?]
The Typical 401(k) Match
When an employer decides to offer a 401(k) plan for its workers, it may provide different types of plans from which to choose. The arrangement provided in these plans can vary by company. Common forms of matching include partial matches or dollar-for-dollar matches.
“Partial matches are when your employer will match part of the money you put into your 401(k), up to a certain amount,” says Scott Schleicher, an advisory manager and senior financial advisor at Empower in Denver.
Many companies opt for the partial match in their plan. “The typical 401(k) match is 50 cents on the dollar up to 6% of the employee’s pay,” says Skeff Bisset, managing partner at Bisset Financial Group in Wilton, Connecticut. For instance, if your employer offers to match 50% of what you contribute, up to 6% of your salary, and you earn $100,000 a year, the portion of your salary that is eligible for a match is $6,000, so you could expect the employer to contribute $3,000.
With a dollar-for-dollar arrangement, you can expect your employer to contribute the same amount as you do, up to a point. “An example of dollar-for-dollar is up to 5% of your salary,” Schleicher says. For instance, perhaps you earn $100,000 a year and put 5% of your salary in a 401(k), which is $5,000, your employer would contribute another $5,000. If you save more, such as 6% of your pay (which is $6,000), the company will only put in 5% (which is $5,000), per the policy.
[Related:New 401(k) Contribution Limits for 2024]
Generous Employer 401(k) Matches
Some companies choose to offer higher matches to recruit and reward employees. Here are examples of several companies with generous employer 401(k) matches:
— Boeing.
— Charles Schwab.
— Citigroup.
— Comcast.
— Honeywell International.
— Qualcomm.
— Southwest Airlines.
Boeing
Boeing will match dollar for dollar the contributions of nonunion workers, up to 10% of their eligible pay. The employer contributions are immediately vested. As an employee, you’ll also get complimentary retirement checkups and online advice. If you have a student loan and qualify for the Boeing 401(k) student loan match, the amount you pay on your student loans will be added to any match-eligible contributions that you make to the Boeing 401(k).
Charles Schwab
You’ll be eligible to participate in the 401(k) plan as soon as you are hired at Charles Schwab. When you first contribute, the company will make a $250 contribution. After that, there is a dollar-for-dollar match on contributions up to 5% of your eligible earnings. The funds will be vested immediately.
[READ: What’s the Difference Between a Pension Plan and a 401(k)?]
Citigroup
Employees who have a 401(k) plan through Citigroup can expect a dollar-for-dollar match up to 6% of their eligible pay each year. Eligibility for the matching contribution begins after working at Citi for a year. After three years of employment, employees are vested in Citi’s contributions. Citi additionally provides a fixed contribution of up to 2% of eligible pay, regardless of whether the employee contributes to the plan, for workers who meet certain criteria.
Comcast
Employees at Comcast can be enrolled automatically in the 401(k) plan and receive dollar-for-dollar matching on up to 6% of eligible pay that is contributed. You can put in more beyond the match on your own, up to the IRS contribution limit. In 2024, those enrolled in a 401(k) plan can place up to $23,000 in the account, or $30,500 for those age 50 and older.
Honeywell International
For workers with a 401(k) plan, Honeywell International matches the first 8% of eligible pay at a rate of 87.5%. This continues up to 7% of base salary. The match is made in January of each year and applies to the contributions from the previous calendar year. Honeywell’s matching contributions vest after three years of service. To be eligible for the match, employees must participate in the plan and contribute to their account. They will also need to be employed through Dec. 15 to receive a match for the corresponding year.
Qualcomm
Qualcomm, which develops technologies and products for mobile devices and wireless communications, has structured its 401(k) plan so that employees at the lowest end of the pay scale can obtain a high level of matching. An employee receives a match of 100% up to the first $1,500 that is contributed to the plan. For the next $1,500 contributed by an employee, the company provides a 50% match. A 33% match is offered for the following $7,500. After that amount, employees receive a 10% match on their contributions. This continues up to the IRS contribution limit of $23,000.
Southwest Airlines
Workers with a 401(k) plan through Southwest Airlines can expect to double their retirement savings up to a point. When workers contribute to the plan, Southwest will match the contributions dollar for dollar up to 9.3% of an employee’s eligible earnings. Employees can also roll over funds from their previous employer.
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Companies With Great Retirement Plans originally appeared on usnews.com
Update 11/13/23: This story was previously published at an earlier date and has been update with new information.
