Learn more about 401k matching with MWE Partnership.
401k retirement plans are a prevalent part of employee benefit plans. Helping people prepare for their retirement assists them vision a long future with your business. 401k matching is another incentive you may choose to add to the contributions that come out of your employees’ paychecks every year. Read on to learn more about 401k matching and how it works.
Who Does 401k Matching Benefits?
401k matching benefits every employee who chooses to open a retirement plan through their employer. In addition, matched contributions from the company (not their paycheck) go into the plan for their future use. For the employees, this is a return on their investment (ROI) into the company. A 401k matching allows the company to retain qualified employees on a yearly basis.
How Does 401k Work?
A 401k matching is typically done in two methods. The first method is instituting a matching scheme that does partial matches per contribution up to a certain percentage of the salary. This way, the benefit is fixed to a specific dollar amount, and the employee must contribute more than the employer to max out the benefit.
Another way to arrange the matching is to provide a 100% match on all contributions up to a certain percentage of the salary. This way, the employee contributes the same amount as the employer’s maximum dollar amount to use up the benefit. Otherwise, any contributions exceeding this dollar amount will not be matched. Matching by percentages might not be reasonable for employees with the highest salaries in the company. In these cases, matching contributions up to a set dollar amount is prevalent.
Vesting Process
Even while making the contributions, employers might set up a vesting schedule for employees. This signifies that all matches made to 401k contributions don’t automatically belong to the employee. In addition, employees must stay on without being terminated by the company for a certain amount of time before vesting all contributions. During that time, the percentage the employer contributes grows steadily.
Get in Your Voluntary, Supplemental, and Health Insurance Policies with the MWE Partnership!
Are you a business looking to provide your employees with essential voluntary benefits? If so, look no further than The MWE Partnership. When you choose The MWE Partnership, you get experienced service and comprehensive voluntary benefit options that will meet all your employees’ needs. With over 17 years of experience, The MWE Partnership is your go-to provider for all your supplemental benefit needs. If you are interested in finding out how The MWE Partnership can help your business, contact us today! We encourage you to like our Facebook page and follow us on Twitter and LinkedIn for the latest voluntary benefit news!