4 ms·

50% match. wow. my current company has no match. previous had 4% match but i didn't get anything since i left before 4 yr match vesting. previous previous ha

50% match. wow. my current company has no match. previous had 4% match but i didn't get anything since i left before 4 yr match vesting. previous previous had no match.

madengr 6y ago
A 50% match seems typical, up to a certain % of salary. No cap on the match is phenomenal.
frob 6y ago
I believe the 50% match the GP is referring to is 50% of what you contribute, not 50% of base salary. For example, if they put in 6% of their base salary, the employer matches with 3%. I assume from context that the 4% you mention is a straight 4%. That is, if you contribute 3% of your salary, your employer will match with 3% as well, but once you pass 4, the employer stops there. So if you're putting in 10%, the employer still just puts in 4%.
CydeWeys 6y ago
What was your company's max contribution? Typically an X% of salary isn't unlimited, it's up to a certain cap. E.g. let's say you're a director making $1M/yr, they're not contributing $40k/yr to your 401k (this would very likely violate the IRS's 401k safe harbor rules).
- lvh 6y ago
  6% of compensation would still be a safe harbor plan, excluding the plan from ACP/ADP test requirements, so unfortunately it's quite possible that the director making ~$1MM annually in salary gets a ~$40k match (though not much more, because the total cap for 2021 is $58k, and that director is likely maxing out or close to maxing out, so $19.5k + $40k would cap them.)
  - CydeWeys 6y ago
    I looked into this more and the IRS apparently sets an "Employee compensation limit for calculating contributions", which is currently $290k. So 4% of your salary on a match ends up being $11.6k, which is slightly better for highly compensated employees than the max $9.75k for a 50% match, but of course is significantly worse for people making way under $290k (i.e. most people). Also worth pointing out that the all-source IRS 401k contribution limit is currently $59k/yr, so even with an insane 500% no limit match or something that manages to pass the safe harbor test, there still is a limit you'll hit eventually. It's high though.
    - lvh 6y ago
      Ah, yes, you're right: I forgot about the contribution limit. Technically QNEC/QMAC can still be used to increase beyond that, because they're not computed off of compensation--but that wasn't your point.

50% match. wow. my current company has no match. previous had 4% match but i didn't get anything since i left before 4 yr match vesting. previous previous had no match.

madengr 6y ago

A 50% match seems typical, up to a certain % of salary. No cap on the match is phenomenal.

frob 6y ago

I believe the 50% match the GP is referring to is 50% of what you contribute, not 50% of base salary. For example, if they put in 6% of their base salary, the employer matches with 3%. I assume from context that the 4% you mention is a straight 4%. That is, if you contribute 3% of your salary, your employer will match with 3% as well, but once you pass 4, the employer stops there. So if you're putting in 10%, the employer still just puts in 4%.

CydeWeys 6y ago

What was your company's max contribution? Typically an X% of salary isn't unlimited, it's up to a certain cap. E.g. let's say you're a director making $1M/yr, they're not contributing $40k/yr to your 401k (this would very likely violate the IRS's 401k safe harbor rules).

lvh 6y ago
6% of compensation would still be a safe harbor plan, excluding the plan from ACP/ADP test requirements, so unfortunately it's quite possible that the director making ~$1MM annually in salary gets a ~$40k match (though not much more, because the total cap for 2021 is $58k, and that director is likely maxing out or close to maxing out, so $19.5k + $40k would cap them.)
- CydeWeys 6y ago
  I looked into this more and the IRS apparently sets an "Employee compensation limit for calculating contributions", which is currently $290k. So 4% of your salary on a match ends up being $11.6k, which is slightly better for highly compensated employees than the max $9.75k for a 50% match, but of course is significantly worse for people making way under $290k (i.e. most people). Also worth pointing out that the all-source IRS 401k contribution limit is currently $59k/yr, so even with an insane 500% no limit match or something that manages to pass the safe harbor test, there still is a limit you'll hit eventually. It's high though.
  - lvh 6y ago
    Ah, yes, you're right: I forgot about the contribution limit. Technically QNEC/QMAC can still be used to increase beyond that, because they're not computed off of compensation--but that wasn't your point.