401(k)s How Much Employers Are Matching
S ome employers base their match on how much profit the company is making. Other employers have what’s called a "graded match," in which the employer matches, say, 50 cents for each dollar an employee contributes up to 3 percent of the employee’s pay, and then 25 cents for each dollar on the next 3 percent.
Despite these variations--matching on profit, graded matches or other arrangements--most employers offer a fixed match, such as 50 cents for every dollar of an employee’s pay, up to a certain percentage of pay. In its study titled "2005 Trends and Experiences in 401(k) Plans," Hewitt Associates found that 70 percent of employers offer fixed matches.
Here’s a breakdown of how those employers are offering their matches, according to Hewitt.