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Most employers add money to your 401(k) when you contribute — but only on the slice you put in. Dial in your plan’s formula and see exactly what you’re capturing, what you’re leaving behind, and what it compounds into.
Below the match cap, every extra 1% you contribute earns the match rate instantly — before any market return. Compare the paths.
Employer matches are almost always quoted as “X% of the first Y% of pay.” Only the slice of salary you contribute up to Y% earns the match, and each matched dollar earns X cents. “50% of the first 6%” on a $65,000 salary: contribute 6% ($3,900) and your employer adds 50% of that ($1,950). Contribute 4% and they add $1,300 — the other $650/yr simply never arrives.
match = salary × min(yourPct, capPct) × matchRateIn plain words: your employer mirrors a share of what you put in, up to a ceiling. Below the ceiling, every extra dollar you contribute earns an instant, guaranteed return of the match rate — 50¢ or $1 per dollar — before any market growth. That is why “contribute at least to the match” is the closest thing personal finance has to a free lunch. One caveat worth checking: employer contributions may vest over a few years — leave too early and you forfeit the unvested share. The growth view compounds monthly at your chosen return; using an after-inflation return (~7%) means the result reads in today’s buying power.
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