Company match for 401k question

[happygirl]

When a company says they match the 401k at a certain percent, does that mean they match that percentage of your salary? For instance, if you make 100k and the company says it will match 5%, does that mean they will put in 5,000$ Also, can you still put in the max of 16,500 even though the company is putting in money above that amount? The company's contribution doesn't count toward the max amount does it?

Thanks in advance!

[disneysteve]

There are a couple of ways a company could do the match. The most common is for them to provide a match to your contribution up to a certain point. A common match is 50% of your contributions up to 3% of your salary. So if you contribute 2%, they'll add 1%. If you contribute 5%, they'll add 2.5%. If you contribute 6%, they'll add 3%. If you contribute 10%, they'll still add 3% because that is the max. If you contribute 0%, they'll add 0%.

Some companies give the "match" whether you contribute or not. Of course, that isn't technically a match since you get it no matter what. So they may automatically put 3% of your salary into your 401k regardless of how much you contribute. That's a great deal.

As for your other question, the contribution limit of $16,500 is how much YOU are allowed to put in. The matching funds don't affect that number. Match is above and beyond your contribution.

[happygirl]

So in the example of a 100k salary, if the company says they will match (at 100%) up to 10%, the employee could contribute 16,500 and the company would put in an additional 10,000?

[disneysteve]

So in the example of a 100k salary, if the company says they will match (at 100%) up to 10%, the employee could contribute 16,500 and the company would put in an additional 10,000?

Yes, they would match dollar for dollar up to $10,000.

[happygirl]

Thanks Disneysteve!