Are You Leaving Free Money in Your 401(k)?

When you think about your paycheck, you probably think about your salary, bonuses, or maybe even your benefits. But there’s another part of your compensation that can be easy to overlook: your employer’s 401(k) match. If your employer offers matching contributions, that match can be a valuable part of your retirement savings—and it doesn't require you to work extra hours to earn it. You just need to make sure you're contributing enough to take advantage of it.

How Much Should You Contribute?

Every employer structures its 401(k) differently, but many companies offer a match based on how much you contribute. According to Vanguard’s How America Saves 2026 report, most employees need to contribute somewhere between 4% and 7% of their pay to receive their full employer match. Yet 22% of participants contributed less than 4% of their pay in 2025. For some employees, that could mean leaving part of their employer match on the table.¹

One of the most common matching formulas is 50 cents for every dollar you contribute, up to 6% of your salary. So, if you contribute less than the amount needed to receive the full match, you're not simply saving less for retirement. You may also be missing out on money your employer is willing to put toward your future. That's why it's worth taking a few minutes to check your company's 401(k) plan and understand exactly how its matching formula works.

Don't Forget About Vesting

There's another important piece to understand: vesting. The money you contribute to your 401(k) is yours. Employer contributions, however, may be subject to a vesting schedule. Some employers provide immediate vesting, meaning their contributions belong to you right away. Others use a graded vesting schedule, where you earn ownership of the employer contributions over several years—often five or six.

Why does that matter? If you're considering changing jobs, your vesting schedule could affect how much of your employer's contributions you get to take with you. It's one more reason to understand the details of your benefits before making a career move.

What Happens When You Retire?

Your 401(k) can be an important source of retirement income, but there are rules to keep in mind once you reach retirement age. In most circumstances, you must begin taking required minimum distributions (RMDs) from your 401(k) or other defined contribution retirement plans once you reach age 73. Withdrawals from a traditional 401(k) and other defined contribution plans are generally taxed as ordinary income. Withdrawals made before age 59½ may also be subject to a 10% federal income tax penalty, although exceptions may apply. And remember, your employer's matching program isn't necessarily guaranteed forever. A company facing financial difficulties may reduce or temporarily eliminate its matching contribution.

Are You Getting the Full Match?

The goal isn't necessarily to contribute a certain percentage just because someone else does. Your ideal retirement contribution depends on your income, expenses, other savings, retirement timeline, and overall financial picture. But before deciding how much to contribute, make sure you knowwhat your employer is offering.

Check your 401(k) plan and ask yourself:

• Does my employer offer a matching contribution?
• How much do I need to contribute to receive the full match?
• Is the employer match immediately vested?
• If not, what is the vesting schedule?
• Am I contributing enough to take full advantage of the match?

A few minutes spent understanding your benefits today could make a meaningful difference in your retirement savings over time. If you're unsure whether you're taking full advantage of your 401(k), we're happy to help you look at your current contribution, employer match, and overall retirement strategy to see whether there's an opportunity to capture more.

^{1. Vanguard, 2026}

FAQs

What is an employer 401(k) match?
An employer 401(k) match is a contribution your company makes to your retirement account based on how much you contribute, usually up to a certain percentage of your salary.

How much should I contribute to get my full 401(k) match?
It depends on your employer's specific plan. Many employers require employees to contribute between 4% and 7% of their pay to receive the full match.

What does it mean for 401(k) contributions to be vested?
Vesting determines when employer contributions officially become yours. Your own contributions are always yours, while employer contributions may become yours immediately or gradually over several years.

What happens if I don't contribute enough to get the full 401(k) match?
You may miss out on some of the money your employer is offering to contribute to your retirement account.

Is a 401(k) employer match guaranteed?
No. An employer can generally change, reduce, or suspend its matching program, depending on the terms of the plan.