Decode both percentages in the formula
The first percentage states how much the employer contributes for each eligible dollar; the second caps the employee contribution considered for matching. Multiply them only after applying the cap to eligible compensation.
Check paycheck timing and true-up rules
Some plans calculate the match each pay period. Front-loading employee contributions and then contributing nothing later can reduce the match if the plan has no year-end true-up. Read the summary plan description before changing timing.
Separate contribution from ownership
Your own salary deferrals are yours, but some employer contributions can vest over time. Leaving before full vesting can forfeit the unvested portion, so display vested and total balances separately when planning a job change.
Example: dollar-for-dollar on 3%, then 50% on the next 2%
At a $72,000 salary, a 5% employee contribution is $3,600. The employer adds 3% of pay ($2,160) plus half of the next 2% ($720), for a $2,880 match and $6,480 total annual contribution before returns.
What to check before you decide
- Match formulas, true-up provisions, eligible compensation, and vesting are plan-specific.
- Do not infer your plan's formula from a coworker or a generic example; use the official plan documents.
Sources behind this guide
These official and primary sources let you verify rules, definitions, and terms that may change.
U.S. Department of Labor — 401(k) plans↗U.S. Department of Labor — What you should know about your retirement plan↗IRS — 2026 retirement plan contribution limits↗