Employer match
Free money your employer adds to your 401(k) when you contribute.
Employer match is when your company contributes to your 401(k) based on what you contribute. Common formulas: a 100% match on the first 3–6% of your salary, or a 50% match on the first 6%.
The instant return is the headline. Contribute 4% with a 100% match and you've earned an immediate 100% return — there is no other investment in personal finance with that math.
What people miss: the match is not unconditional. Most plans require you to stay at the company for a certain number of years before the matched money is fully yours (this is vesting). Some plans cliff-vest — 0% yours until year 3, then 100% — others graded-vest — 20% per year for five years. If you change jobs every two years, an aggressive vesting schedule means you never actually keep the match.
Example
A 100% match up to 4% of salary means if you earn $80,000 and put in 4% ($3,200), your employer adds another $3,200 — a 100% return on day one.
Why this matters
It's the highest-return investment most people will ever have access to. Skipping the match is leaving immediate, guaranteed compensation on the table.
The catch
Employer match dollars are usually subject to a vesting schedule — meaning if you leave before X years, you forfeit some or all of the matched money. Always read your plan's vesting schedule before you take a job offer's "we match X%" at face value.