There are employers who will contribute to a 401(k) plan on behalf of their employees even if the employees do not participate in the plan. On the other hand, there are firms who will contribute to the 401(k) plan only if you contribute some of your own money in the plan. The amount an employer will match to your 401(k) contribution varies by employer. The most common match is 50 cents or $1 for each dollar the employee contributes. The cap on the amount an employer can match is 6% of your salary.

Tips on How to Maximize:

• Consider automating contributions by setting it up as a payroll withholding to contribute automatically.
• Increase contributions over time. You can save up to 15% of your pretax income.
• Utilize catch-up contributions when available. For 2024, the catch-up contribution is an extra $7,500 on top of the $23,000 limit for a total limit of $30,500. This applies to employees who are 50 years and older.
• Stay current on changes to 401(k) contribution limits, as well as any changes to the amount.
• To maximize employer matching contributions in your 401k plan, contribute enough to reach the full amount of your employer’s matching percentage, which is usually a set percentage of your salary up to a specific limit.
• Pay attention to the 401(k)-vesting schedule for the employer’s match. Some companies have immediate vesting, while other plans require as long as five or six years on the job before you get to keep the entire 401(k) match. You are always fully invested in your contribution.