Author Topic: Matching contribution question  (Read 3852 times)

Sebastian

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Matching contribution question
« on: July 30, 2013, 01:42:55 PM »
Hello All,

I have a quick question. I think I figured this out but it's just a bit disappointing. My employer will match our 401K contributions at the end of each year apparently. Now assuming they match 3% (just to be on the safe side and be conservative. Not sure what they match till the end of the year... smh) Will that really come out to be much?

I'm guessing I'll put in something like 8000 for the year of 2013. 3% of that is something like 420 bucks. So really? That's the "matching contribution" everyone raves about? or am I calculating it wrong?

Thanks,

Eleden

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Re: Matching contribution question
« Reply #1 on: July 30, 2013, 01:54:40 PM »
The match is not 3% of your contributions, it's 3% of your salary.

So if you make 50K and they match 3%, you'll get 1,500 in matching contributions.

Spork

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Re: Matching contribution question
« Reply #2 on: July 30, 2013, 01:58:48 PM »
Yeah, it's usually something like "If you'll contribute 3% to your 401k, then so will we."  Even if they match at half (you put in 6% and they put in 3%) the ROI is 50% before you even start investing.  It's hard to say no to.

NinetyFour

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Re: Matching contribution question
« Reply #3 on: July 30, 2013, 02:09:09 PM »
At my job, I put in 8% and my employer puts in an additional 11.4%.  First, they take out deductions for life insurance, health, and dental, and then they compute the contributions to my retirement.  It is pretty sweet, I think.  It ends up being about $1000 per month that goes into my retirement account.

Sebastian

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Re: Matching contribution question
« Reply #4 on: July 30, 2013, 02:12:50 PM »
Wow I really hope that is how my company does it too! That would be sweet :) Thanks for the great news guys! I'm assuming 3% of my gross income right? not net

senecando

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Re: Matching contribution question
« Reply #5 on: July 30, 2013, 02:17:41 PM »
Yup, it all happens pre-tax, so it'll be 3% of your pre-tax salary.

matchewed

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Re: Matching contribution question
« Reply #6 on: July 30, 2013, 03:45:54 PM »
Wow I really hope that is how my company does it too! That would be sweet :) Thanks for the great news guys! I'm assuming 3% of my gross income right? not net

While they may not outline the actual match percentage value they should be outlining what it is a percentage of within the company policy associated with the plan. Try verifying with your HR department, most companies will have either an employee handbook or some such to provide these answers.

scarab007

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Re: Matching contribution question
« Reply #7 on: July 30, 2013, 06:22:29 PM »
same here on 401k matching. My company puts 10% of gross salary each Jan in my account. Pretty sweet and yes I do max out contributions!

So it is probably the same for you 3% of gross salary.

Sebastian

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Re: Matching contribution question
« Reply #8 on: July 31, 2013, 08:10:43 AM »
I started this plan in June though. So I'm guessing they will only match about half of my salary?

Spork

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Re: Matching contribution question
« Reply #9 on: July 31, 2013, 08:14:58 AM »
I started this plan in June though. So I'm guessing they will only match about half of my salary?

Probably.  You'll have to read your employee handbook (or whatever HR calls it there).  Some places enroll quarterly... so it could also round down to the nearest quarter (or something similar). 

Edit to add:
You might also read on "vesting".  Many companies don't let you have the "match portion" for some number of years.  For example, where I work now you vest 20% a year for the match portion.  In other words: it takes 5 years for the "match portion" to be fully yours.
« Last Edit: July 31, 2013, 08:16:47 AM by Spork »

Sebastian

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Re: Matching contribution question
« Reply #10 on: July 31, 2013, 08:44:39 AM »
I started this plan in June though. So I'm guessing they will only match about half of my salary?

Probably.  You'll have to read your employee handbook (or whatever HR calls it there).  Some places enroll quarterly... so it could also round down to the nearest quarter (or something similar). 

Edit to add:
You might also read on "vesting".  Many companies don't let you have the "match portion" for some number of years.  For example, where I work now you vest 20% a year for the match portion.  In other words: it takes 5 years for the "match portion" to be fully yours.

Yes I'm familiar with the vesting tidbit. It will be 3 years for me to keep my investments. I've been here for 2 years, and plan to wait it out till the 3 year mark. Slowly building up my IT skills to find something next June ;)