Personal Finance & Money Stack Exchange is a question and answer site for people who want to be financially literate. Join them; it only takes a minute:

Sign up
Here's how it works:
  1. Anybody can ask a question
  2. Anybody can answer
  3. The best answers are voted up and rise to the top

"Your employer will match up to 10% of your compensation that you elect as pre-tax contribution. When you contribute to your plan, your employer matches 50% of the first 10% of your pay."

I don't get what the above statement mean really. I kind of understood the first statement. For example, if I make $100,000 per year, my employer can match upto 10% i.e., $10,000. What does the 50% of the first 10% of your pay mean?

share|improve this question

It means however much of your pay you contribute, your employer will contribute half that much, with the employer's contribution capped at 5% of your pay (that is, 50% of 10%). If you make $100k, anything you contribute up to $10k will be matched at 50%. If you contribute the full $10k, your employer will contribute $5k (50% of what you contributed). If you contribute $6k, your employer will contribute $3k (again, 50% of what you contributed). If you contribute more than $10k, your employer will still only contribute $5k (50% of 10% of your pay is the cap on the employer contribution).

share|improve this answer
And this is the case when I say the match outstrips the annual expense. It would take some time for a 1% fee to negate a 50% match. – JoeTaxpayer Jul 20 '14 at 23:34

Your Answer


By posting your answer, you agree to the privacy policy and terms of service.

Not the answer you're looking for? Browse other questions tagged or ask your own question.