401(k) Matching: 3 reasons why your boss will want to match your 401(k)

March 17, 2020
4 min read
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As someone on the front lines of human resources, we’d bet you’re pretty savvy about the challenges facing your workforce. Often, those problems are poor employee retention and slow employee recruitment. A painful combination if there ever was one. So what can be done? Offer a 401(k) with a match.

As someone on the front lines of human resources, we’d bet you’re pretty savvy about the challenges facing your workforce. Often, those problems are poor employee retention and slow employee recruitment. A painful combination if there ever was one. So what can be done? Offer a 401(k) with a match.

401(k) retirement plans are one of the most powerful retention tools your business can deploy to boost retention and improve recruitment. That’s because a whopping 46% of non-retired Americans have serious concerns about retirement. Allowing employees a solution to that stressor is a powerful motivator both to stay in a position, and to accept an employment offer.

You’ve probably figured that for yourself, after all, you’re reading this article. So we know 401(k)s boost retention.

Our goal is to provide you ammunition to help persuade your boss to offer 401(k) matching. And to paint the picture of what it takes to roll out that match, once your boss gives you the thumbs up.

Three 401(k) Matching Reasons: Why your boss should offer a 401(k) match

  1. Attracting and retaining great people. All else equal, this may be the deciding factor between a candidate choosing one company over another. The data shows its importance: 75% of new hires at a company offering a 401(k) say the retirement plan provides a compelling reason to stay. A retirement solution is so important that 51% of employees joined their current employer largely because it offered a retirement plan. By structuring the 401(k) matching so it vests later in an employee’s tenure, the 401(k) match has been proven as a consistent way to attract and retain great people.
  2. The tax benefits. Matching contributions are deductible on the employer’s federal income tax return. The great news is a company can deduct up to 25% of the compensation of all eligible employees participating in the plan.
  3. Your competitors are doing it. In fact, the majority of companies offer some sort of matching contribution (averaging 2.7% of a person’s pay). The most common form of 401(k) matching is 50 cents on the dollar. About 40% of companies contribute 50 cents for every dollar employees contribute up to 6% of their pay. Another 38% match employee contributions dollar for dollar, but the maximum is normally lower — commonly 3%.

Pro tip: a lot of times, leadership teams want to see hard numbers before considering a company match.

If your initial pitch goes well, the next step is setting up and rolling out your new 401(k), (while probably also continuing to prove the idea to the C-Suite). At ForUsAll, we’ve identified four key ingredients to a simple and seamless 401(k) rollout:

  • Calculate the cost of different match levels. This can be a little tricky. You want to hit the right balance of generosity and practicality and deliver a solution that makes solid financial sense.
    For example, let’s say you decided to match $0.50 on the $1 up until 6%. If your employee were to defer 6%, you as the employer would be contributing 3% (6% x $0.50). Keep in mind this varies from one industry to another, and can also be changed depending on your goals. For example, if you wanted to attract top-tier talent, a more generous match would be the way to go.
  • Determine the match vesting schedule. This is another point at which you’ll have to make the best choice for your industry and goals. There are three main types of vesting: immediate, graded and cliff.
  • Immediate: The most generous option, immediate matching, means the employee owns 100% of the match and the employer is not permitted to take it back for any reason. In 2019, 22% of employers picked immediate vesting.
  • Cliff: One of the least generous schedules. Employees are required to work a specific period of time before they’re able to claim their matches. If your cliff is three years and you quit at two, no match for you. We’ve seen employers use this as an incentive to retain talent. In 2019, 22% of employers opted for cliff vesting.
  • Graded: The most popular schedule type of 2019, graded vesting was the choice of 47% of employers. This is the goldilocks of vesting schedules. After every year of service your match vests a little more. The maximum length is six years.
  • Automate company match calculations and contributions. This is essential - ask your 401(k) provider to connect with your payroll platform and turn on automatic company match calculations. This way you have one system that is always tracking changes in employee deferral rates and calculating the correct company match based on that. And with full payroll integration, you won’t need to do a thing, since the correct amounts should be swiftly and automatically routed to employee 401(k) accounts.
  • Show off the 401(k) match to employees. You’ve leveled up your 401(k) game! That’s something to be celebrated. Even more importantly, it’s a great opportunity to get the big participation and reputation boost you want for retention and recruitment. News that the company is matching 401(k) contributions is a great motivator for people of all ages and job types to get into the 401(k) plan. Here’s the best part: The better you follow through with 401(k) inspiration and education, the more effective the whole solution will be - for everyone. At ForUsAll, we have a virtual advisor named DAVE that helps explain how your company’s 401(k) plan works and how to get the most of the match.


Every day, legions of HR workers across the US are dealing with the dismal rigamarole of retention and recruiting. But those days are over. You’ve taken the initiative to leave those ranks, and become 2020’s HR champion. With the stats and calculations we’ve laid out here, you have everything you need to effectively make your case to the team.

The fact is - top candidates are focused on long-term benefits. Between the boost to retention, the ability for more effective bargaining during the recruitment, and the tax breaks, employer-matching 401(k) plans are one of the smartest solutions available.

Go beyond a basic 401(k)

Give your employees more than just a 401(k), join the movement.

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David Ramirez - CEO at ForUsAll
David Ramirez

About the author

David Ramirez, CFA, is a recognized 401(k) expert with over 20 years of experience in 401(k), ERISA, cash balance plans, and ESOPs. A UC Berkeley graduate, he played a pivotal role at Financial Engines, a 401(k) advisory firm founded by Nobel Laureate William Sharpe, Ph.D., where he was a portfolio manager who helped manage over $50B in 401(k) assets.  His clients included some of the largest Fortune 500 companies and state governments.

Go beyond a basic 401(k)

Give your employees more than just a 401(k), join the movement.

Happy employees with a 401(k) they deserve offering more choice more growth.
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This material has been prepared for informational and educational purposes only and should not be construed as a recommendation by ForUsAll, Inc., its affiliates or employees (collectively, “ForUsAll”)  to activate a cryptocurrency window or invest in crypto.  Investing in crypto can be risky and investors must be able to afford to lose their entire investment.  You should consult with your own advisers before activating a cryptocurrency window or investing in crypto.  ForUsAll does not provide legal, tax, or accounting advice. Please refer to your Plan's fee disclosure for more details.© 2023 ForUsAll, Inc. All rights reserved.
1 Schwab 2022 401(k) Participant Study - Gen Z/Millenial Focus, October 2022.
2 As of 12/31/2022. Employees include both current employees and terminated participants with a balance.
3 "Morgan Stanley At Work: The Value of a Financial Advisor" Morgan Stanley, March 2022.
4 Sarah Britton was a client when she provided this testimonial through an independent third party review website. She received no compensation for her remarks. There are no known conflicts of interest in the provision of her comments related to the services provided.