Step 3 - Employer Matching Contributions

Last updated:
July 2, 2021

Employer retirement contribution matching is a benefit that many employers in the US offer. Most employers that match retirement contributions do so at a certain rate, and only up to a certain amount. Approximately 70% of companies with matching contributions contribute 50 cents for every dollar that employees contribute, up to 6% of their pay. About 20% of companies match employee contributions dollar for dollar, but commonly up to only 3% of their pay.

When you enter step 3, you’ll have the option to choose either “Employer matches” or “Employer does not match”. If you are not working at a company with employer matching, you can skip Step 3 for now. Nonetheless, you can factor employer matching benefits into your plan if you have that benefit in the future. This offering is more powerful than it appears at first glance, as the employer contribution is essentially additional growth of your income at a rate (+50% or +100%). That far exceeds most investment products in the market.

For those of you with access to employer matching, Step 3 helps you understand the potential of your benefit and form a plan around it. With this information, you can make full use of this employer offering. You’ll be prompted to specify which income is related to the employer match. After specifying which income, we will then ask which type of plan you have, what is your pre-tax salary, and how does your employer match. Once these fields are completed, we’ll let you know how much you should contribute to your retirement benefit on a monthly basis to receive your entire match. We’ll also provide you with the annual contribution you should make.    

Overall, this step is designed to help you understand how much you need to contribute to your retirement plan to earn the maximum match. This is possible by understanding the way that your employer calculates their contribution amount. Once this amount is determined, we guide you to figure out how much you should be setting aside for your contribution. Then we show you how this change fits into your plan.

After Step 3, your plan should be in a place where it helps you make the most of your employer matching benefits program, a change that should greatly benefit you in retirement.

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