A workplace 401(k) account is important for retirement security and has good reason. The majority of private sector workers have access to these plans. These plans are accompanied by easy registration and generous tax cuts. In fact, more and more plans actually register workers by default unless they opt out, thus saving retirement benefits at many workplaces.
Of course, the 401(k) offers more than a simple sign-up process, automatic contributions from pay, and a streamlined mix of investment options to choose from. It also comes with a contribution that many people match their employers. This is invaluable as the company offers free money to boost your retirement savings with each qualifying contribution you make.
A matching contribution refers to the money your employer puts into your 401(k) when you invest your own funds.
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As recent research shows, some companies are far more generous than others. To help workers achieve successful retirement, let’s take a look at some of the US companies. You can also look into the details of the average 401(k) match to see how your company’s products compare.
These are the US companies that have made a congruent contribution to the most generous 401(k)
A recent study from Solo 401(k) planning provider Carry has revealed which companies in the US are most generous in providing employer 401(k) contributions. Carry the company that was evaluated based on many factors, including:
Match Type: Some companies offer full matches or dollar dollar matches, so donating $1,000 can do the same. Others offer partial matches. For example, provide 50% or 75% of the amount contributed. And others will make non-selective contributions or simply put money in your account, whether you’re doing the same thing or not.
Max Match: Most companies establish maximum contributions (this may be lower than the 401(k) contribution per year; IRS set is limited). This limit could be a fixed amount or a percentage of salary (for example, an employer might match 100% of contributions up to 4% of salary).
Eligibility: Some companies require that you work in the business for a certain amount of time before you qualify for a matching contribution, such as a month or year.
Vesting Period: This determines that the matching funds belong to you, even if you leave your job. Some companies offer immediate vesting, so if your employer is contributing to a 401(k) today, you can keep your money off tomorrow when you leave. Others are scoring the best schedule, so your actual ownership interest in your employer’s contributions increases over time (your own contributions are always entitled to 100% from the first day).
The table below ranks the top 20 companies in terms of the value of their matching contributions, taking into account all these relevant factors.
Source: Carry.com
High-tech, biotech and financial services companies are not surprising, they are included in this list of this top 20. They often have to compete for talent, which results in them having attractive perk packages.
One surprise here is General Dollar, whose average annual salary was recently estimated by Zippier at $32,000 a year. The generous 401(k) plan at 25% matches, applicable to both full-time and part-time employees, is a company’s way of compensate for lower salaries that are typically associated with the retail industry, and thus may promote employee loyalty.
How are 401(k) compared?
All workers want a match for the dollar equivalent to 25% of the first day’s compensation. This will qualify on the first day and will give you the rights rights rights!
This matching structure allows you to earn $100,000 a year and donate up to $23,500 in donations (contribution limits for employees under the age of 50 in 2025) to earn an extra $23,500 from your employer matching contribution this year.
Of course, such generous matches are not available to most of us. In fact, Vanguard’s new How America Saves Report reveals what a typical match looks like, and while not too generous, of course, it’s worth arguing. According to Vanguard, these are the most common characteristics of a 401(k) match program.
Half of all Vanguard plans provided only the consistent contributions of employers. 36% of the plan provided employer contributions that were not matched with matching (referred to as non-selective contributions).
Consider another $100,000 worker. If you win a match worth just $0.50 per dollar in the first 6% of your salary, the total match you qualify for is $3,000, and you will need to give $6,000 to get it. And how many workers maintain this depends on his vesting schedule and how quickly he leaves his job.
The good news is that nearly half of all plans provided immediate vesting of employer matching contributions, and five out of the 10 plan participants were registered in the plan offering immediate vesting.
Still, this means that a considerable number of employees will have to wait a long time to own a matching fund. The data below provides details on how different plans deal with vesting issues.
Of employers offering matching funds, the average match was 4.6% of wages, with a median match of 4%. Among the plans with non-selective contributions, the average contribution was 5.3% of wages, with a median of 4.5%.
Thus, a $100,000 earner who has not received an average match and non-selective contribution would have been able to win just $4,600 in matching funds from his employer.
Most employers also did not offer matches for the dollar. The most common formula used was $0.50 per dollar for the first 6% of the salary, but the table below shows the matching formulas used in all plans.
Here is how Vanguard characterizes the most common match formulas.
For employers offering other contributions, 43% immediately gave employees full ownership, while 29% used a 5- or 6-year stage vesting schedule.
The beauty of 401(k) matches
Now that you know both the average 401(k) plan and the most generous plan in America, you can see how your comparisons are compared. Hopefully your company is as generous as the company that made the top 20 list. Otherwise, you should claim every matching fund as possible, as it could make all the difference in retirement security.
Get the full story: How is your finances “average”?
Want to see how much your retirement portfolio compares to your peers? read:
