Matching Contribution

  

Categories: Tax

As applied to a 401k, a given employee might contribute 3 grand a year from her salary; her generous-benefit-giving employer might make a matching contribution of 3 grand, so that she's putting away 6 grand a year for her retirement.

And note that, if she's getting $50k in salary, she might also cost $8k a year in healthcare benefits...and then, if the company is doing a matching contribution of $3k, it costs the company at least $61k to keep her gainfully employed. Those matching contribution costs ain't free to the company. Matching contributions are a lovely benefit, as both 3 grands are tax deferred to the retirement years of gray hair, loosening teeth, and backaches.

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Finance: What is a 401(k)?51 Views

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Finance a la shmoop... what is a 401k plan? okay say it with me tax deferred savings

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that's it it's really not all that complex for the fancy numbers there all [Complex formula scribbles]

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right well when you make money at work you get to defer the tax that you'll pay

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on your income or earnings to be paid much later in life and you get to invest

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brokerage account and then at that point well you'll pay ordinary income tax on

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realize that Social Security wasn't all that secure and that a whole generation

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of people who had paid money into Social Security wouldn't get anything back so [People protesting outside the white house]

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wealthier masses to save money for their retirement and this was a new idea at

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the time a whole new concept like a flying car before then it was mama [Man talking and flying car goes by a window]

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corporation who managed the pension money for her employees you know that

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long-term lifetime loyalty to the company and was all just very you know

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IBM like a born in pinstriped blue diapers IBM employee with a hard loyal [Baby boy playing with a flashing rattle]

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workforce working away there toiling in the IBM salt mines for 35 years

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invest their retirement savings on their own and that's a good thing most of the

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