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I'm trying to help someone compare benefits for two different companies. However, we have both interpreted the 401k match statement in the benefits summary differently for one of the companies.

35% company match up to first 6% of employee contribution.

What would the company contribute if the employee were contributing $10,000 per year as written? Like $210? As written, it doesn't even sound useful.

Is this likely a mistake in the benefits summary text or have you actually seen a match setup like this? I'm thinking this is supposed to say "35% company match up to 6% of employee salary" or something similar rather than up to 6% of employee contribution. We've requested clarification on this but haven't heard anything yet.

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That's almost certainly a confusingly-worded version of

Company will match employee's contributions, up to 6% of employee's salary, at a 35% rate

or similar, as you expect. The alternate reading doesn't make sense grammatically - "up to" is incorrect in that phrase (35% match of the first 6% of employee contribution would be okay, but "up to" doesn't parse, since every contribution is 100% of itself).

I've more often seen the exact percentage mentioned - but that's because it's always been 50% in my experience, meaning

50% company match of employee contributions, capped at 3% of employee salary (when contributing 6% or more of salary)

35% of 6% is 2.10% of employee salary so it's a bit more confusing to put in that terms.

But of course, as with any unclear terminology in a benefits package, ask the company HR forthwith.

  • As a side note, when did matches become 35% and not 50%? I remember when they went from 100% to 50%, but... – Joe Aug 24 '15 at 23:16
  • I've had various terms on 401k, such as match 2%, 50% on next 2%, and 25% on next 2%, or other wacky schemes. My current employer matches 100% for any amount I contribute, though, which is the best 401k I've ever had the privilege of participating in. – phyrfox Aug 24 '15 at 23:23
  • Yes Joe, you got it. Pretty bad wording. – JoeTaxpayer Aug 25 '15 at 0:24
  • Yeah, it depends on the company. My current employer matches 100% up to 5% with no vesting period. – Kevin Aug 25 '15 at 3:12
  • Since employee contributions are pretax employers do not have to pay employer side FISA, employer withholding, or state tax. Short story, any match less than approximately 4% net actually makes them money. Same thing for other pretax deductions like commuter benefit. TransitChek makes this case in their benefits pitch. – user662852 Aug 25 '15 at 13:51

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