Meet the match, no I’m not talking about a new online dating site. What I’m suggesting is if your company provides a match of your 401k (or retirement plan in whatever form) contribution that you meet it. Are you taking full advantage of the match?

Your Human Resources Department (HR) will have your plan specific details, but in this article I want to provide you with some information and terms that will help the conversation.

A company match is where your company contributes a set percentage to your retirement account based on your contribution to your account. There are two things to be aware of. One, there is a limit to the percentage amount and the base amount. Two, there is a vesting schedule to “earn” the match. Let’s talk about both.

VESTING
For the money you contribute, you are always 100% vested. Vested means you earned it and you own it.

For the money your company contributes, there is always a vesting schedule that will range from immediate to a maximum number of years. In addition, there are stepped and cliff vesting schedules.

Cliff means you vest typically from 0% to 100% after X number of years, like three years. But it could vary. Some plans vest immediately, which means you are 100% vested immediately on both your contribution and the company contribution.

Stepped means you vest a set percent over X period of years. For example, you might vest 20% per year for five years of the company contribution.

MATCH
For the match, it typically ranges in the percentage amount and base contribution calculation. What I mean will be clearer with an example.

Some companies will match your contribution with 100% up to the first 3% of contribution (the base). It may match 50% of the next 3%. Each plan varies as to the percentage and base.

CONCLUSION
Check your plan’s vesting schedule and match policy. Take full advantage of the full match over the full base. If it is X% on Y% contribution, then contribute at least the Y% amount. It’s “earned (or will be), yet free” money. In effect, for your contribution, you are already making a “return” on your savings. Be aware of your vesting schedule, but don’t fret about it. Odds are you will be at your job longer than you think.

Then follow the Comets.