An instant return
Many employers match part of what you put into a 401(k). A common formula is 50% of your contributions up to 6% of pay. On a $50,000 salary, contributing 6% ($3,000) brings in $1,500 from the employer, so $4,500 lands in the account. That's a 50% return before the market moves at all.
Cheaper than it looks
If the contribution is pre-tax, it also lowers your income tax. In the 12% bracket, $3,000 in costs about $2,640 of take-home pay. So $2,640 out of your paycheck puts $4,500 in the account, about 70.5% more than it cost you.
What skipping part of it costs
Contribute 3% instead of 6% and the employer adds $750 instead of $1,500. The missing $750 a year, invested every year for 40 years at a hypothetical 7%, would be about $149,726. That's the "match left on the table" line on this page.
Formulas differ
Other common formulas include 100% up to 4% of pay, or tiered versions like 100% of the first 3% plus 50% of the next 2%. Enter the match rate and cap from your plan to see your numbers. Some plans now also match student loan payments as if they were contributions (allowed since 2024 if the plan opts in). Your plan's Summary Plan Description has the exact rules.
Vesting
Employer contributions may vest over time, meaning you keep them only after a certain period of service. Federal rules cap how slow vesting can be: full vesting after at most 3 years (cliff) or gradually over 2 to 6 years (graded). Your own contributions are always 100% yours.
Limits
The match doesn't count toward the $24,500 employee limit for 2026. It does count toward the $72,000 total limit on all contributions to your account. The growth figure uses a steady hypothetical rate and ignores fees and taxes.
Sources
Last reviewed: Sep 28, 2026