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401k Company Matching Explained: In this video, Justin covers everything you need to know about 401(k) Company Matching programs including vesting schedules, different types of matching, availability of matching programs, contribution limits, IRS contribution limits, and how does 401k matching work, in general.
401k matching can be a confusing topic for folks who are new to having them, but rest assured, it is pretty easy to understand once you dig into it a bit, and you can use your 401k employer match to grow your wealth steadily over time until you can retire.
#401k #CompanyMatch
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Saving for retirement can be a daunting task, but one tool that can help make it easier is a 401(k) plan. These employer-sponsored retirement accounts allow employees to save a portion of their paycheck for retirement on a tax-deferred basis. Many employers also sweeten the pot by offering a 401(k) company match.
A 401(k) company match is essentially free money that your employer contributes to your retirement account based on the amount you contribute. The most common type of match is a dollar-for-dollar match up to a certain percentage of your salary. For example, if your employer offers a 100% match on the first 3% of your salary, and you contribute 3% of your salary to your 401(k) account, your employer will match that contribution dollar for dollar.
Some employers offer more generous matches, such as a 50% match on the first 6% of your salary. In this case, if you contribute 6% of your salary, your employer would contribute an additional 3%. It’s important to understand the specific terms of your employer’s match so that you can maximize your contributions and take full advantage of the free money on offer.
There are several benefits to taking advantage of a 401(k) company match. First and foremost, it’s essentially free money that can boost your retirement savings without any additional effort on your part. Additionally, contributions to a traditional 401(k) plan are made on a pre-tax basis, which can lower your taxable income and potentially reduce your tax bill.
It’s worth noting that not all employers offer a 401(k) match, so it’s important to check with your human resources department to see if you’re eligible for this benefit. If your employer does offer a match, it’s a good idea to contribute at least enough to take full advantage of it. Failing to do so is essentially leaving money on the table.
In conclusion, a 401(k) company match is a valuable benefit that can help boost your retirement savings. By taking advantage of this free money, you can accelerate your path to a comfortable retirement. If your employer offers a match, be sure to contribute enough to maximize this benefit and make the most of your retirement savings.
I recently released a Q&A video covering a lot of the questions you guys have asked in the comments on this video. You can check it out here: https://youtu.be/UvlkPtg7oxc
Question, Justin. I cannot find the answer to this question & am hoping you could help. My company matches 3%. Let’s say I only put in 1% from January to April. If I were to put in an extra percentage the remaining months out of the year, would they be matching the 3% as long as I put in 3% of my income for that year? Or is it only for the months I put in the 3% or more? I just want to know if it’s worth putting in extra the remaining months for the match of the entire year. Sorry if I didn’t ask the question clearly & I appreciate this video so much!
Of course there are rules for matching. Of course not every company literally means matching. The whole system is so well designed that it will look like you are benefiting from it, but you really aren't. Yeah…being a millionaire at 59 1/2 when my dick stops working is pointless. You must have a different plan. The biggest one: it's not a rule but mere benefit but it's sold by society as an idea that you must practice or you will die. Argument: no other more secure way to be rich. Counter: so that means whatever bullshit company i work for, I have to sell them my soul for 55 years. JUST SO THAT I CAN MAKE MY 1st MILLION AT THE END OF THE 55TH YEAR AND FOR THAT I WILL BE CALLED A GOOD HARDWORKING AMERICAN CITIZEN. FUCK! IN short, just think about the vesting schedule.
Anyways, thanks a lot Justin for uncovering this topic in good details. And please don't mind me, i am just a 21-year old
Than you foe the video. My only question would be what happens if u have two jobs that both offer 401k matching 100% is that allowed ? Do the rules for collecting the money after the vested time frame is met chnages?
What if you have 2 jobs can you max on both jobs?
So if i did a 7% match with my company, i could theoretically pull out money evry year from my 401k and get that money that my company gave me in my 401k?
This vid is pure gold, thanks for your effort.
What if I worked at the company for 4 years but just started investing this year? will the less than 5 year penalties apply to my contributions if I leave? or will I be able to take everything out if I leave in the next year or two?
Great content, calm voice. Subscribed immediately.
thank you so much for this break down that I never knew in my 18 years of being in the work force. starting late in life
My I respectfully disagree with the "funds matching = a raise" analogy. That money isn't available till retirement and is taken back if you aren't vested. Just my 2 cents
I just don’t understand why the company match is called “free money” ? Afterall, you have to pay taxes on the company match when your ready to withdraw it after retirement.
Would this be a good idea if I’m not sure I plan to live in the U.S. til retirement? Can I enroll anywhere then take the money if I decided to go to my home country?