Employer matching contribution ( or matching contribution)
Definition
Contributions made by the employer in addition to & contingent upon salary-deferral contributions made by the participant.
Matching contributions are can be made to 401(k) plans-including SIMPLE 401(k) plans, SIMPLE IRAs and 403(b) plans.
Matching contributions are usually based on a percentage of the participant’s compensation.
Examples of matching contributions include the following
$1-for-$1 up to 3% of compensation
Translation , the employer will contribute $1 for every $1 the employee puts in as a salary deferral contribution. However, the amount the employer puts in will not exceed 3% of the employee’s compensation
$0.50 on every dollar, up to 6% of compensation
Translation , the employer will contribute $0.50 for every $1 the employee puts in as a salary deferral contribution, however, the amount the employer outs in will not exceed 6% of the of the employee’s compensation
Referring Cite
IRC
§ 401(k), IRC
§ 408(p), IRC
§ 403(b) , The governing plan document
Additional Helpful Information
- Employees are encouraged to make as much salary deferral contribution as is necessary to receive the maximum matching contribution the employer will make
- Matching contributions under a SIMPLE IRA are not subject to the compensation cap
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