A match is an employer contribution triggered by your own. On a $70,000 salary a four per cent match is $2,800 a year, so ten years of it is $28,000 contributed before any investment growth at all. Two conditions decide whether it is real: you have to contribute enough to earn it, and it has to vest before you leave.
A match is not a benefit, it is salary
An employer contributing six per cent of your salary to a retirement account is paying you six per cent more. The only difference from cash is that you cannot spend it now.
Which means declining a match by not contributing enough to earn it is declining part of your pay. It is the most straightforwardly costly common mistake in this whole area, and it is reversible today.
Reading the formula properly
Formulas differ in ways that change the number substantially. “100 per cent of the first three per cent, then 50 per cent of the next two” yields four per cent of salary when you contribute five. “50 per cent up to six per cent” yields three when you contribute six.
Work out the exact contribution rate that maximizes the match, and set yours there. Anything below it leaves money the employer had already budgeted for you.
Why the compounding matters more than the amount
The contribution is made now and grows for the whole period until retirement. A match received in your twenties has decades to compound; the same match at fifty-five has years.
That is why the early-career version of this decision is worth so much more than it feels, and why the arithmetic looks unimpressive on a monthly pay stub and dramatic across a career.
Vesting decides whether you keep it
Your own contributions are always yours. Employer contributions vest on a schedule, and under federal rules for defined contribution plans that is no slower than three-year cliff or six-year graded.
A cliff means leaving at two years and eleven months forfeits the entire employer portion. That is a real number and it belongs in any decision about when to move, alongside the salary increase.
Comparing two offers on the match
Convert each to a percentage of base and add it to the salary. An offer $4,000 lower with a match three percentage points better is roughly even on a $100,000 base — and better over time, because the match compounds and the salary difference does not.
Ask for the formula in writing rather than the headline. “Up to six per cent” and “six per cent” are different offers and both get described the same way.
The other employer contributions
Some employers make a non-elective contribution regardless of what you put in — a percentage of salary that arrives whether or not you participate. That is pure additional compensation and it is frequently invisible in an offer discussion.
Profit sharing and safe harbor contributions work similarly. Ask specifically what the employer contributes in total, not just what it matches.
What to check on your own arrangement today
Your current contribution rate against the rate that maximizes the match. Your vesting schedule and where you are on it. And whether any employer contribution arrives that you were not aware of.
Those three take ten minutes in a benefits portal, and the first one is the only item in this article that can be fixed this afternoon.
Where this fits against everything else
A match is guaranteed, calculable and low-risk, which puts it in a different category from equity or a discretionary bonus. In a package comparison it should be valued at face value, near the top of the reliability order.
People routinely negotiate hard over a few thousand dollars of base while ignoring a three-point difference in employer contribution worth more over any reasonable horizon.
Common questions
What is a match actually worth?
A four per cent match on a $70,000 salary is $2,800 a year, so ten years is $28,000 contributed before any investment growth.
Do I have to contribute to get it?
Usually yes, and up to a threshold. Contributing less than that leaves part of the match unclaimed.
Is the match immediately mine?
Your own contributions always are. Employer contributions may vest over time, and federal rules broadly cap that at three years on a cliff or six years graded.
How should I count a match in an offer?
Only the portion that vests within the time you genuinely expect to stay. Beyond that it is a figure on a page.
What should I ask before accepting?
The match formula, what you must contribute to earn all of it, and the vesting schedule.
Is an employer match really worth that much?
It is salary you cannot spend yet. Not contributing enough to earn the full match is declining part of your pay.
How does vesting affect it?
Employer contributions vest no slower than three-year cliff or six-year graded. Leaving at two years and eleven months under a cliff forfeits the entire employer portion.
How do I compare two offers on retirement?
Convert each employer contribution to a percentage of base and add it to salary. Ask for the formula in writing — 'up to six per cent' and 'six per cent' are different offers.