How Does 401(k) Company Matching Work?

You'll regret leaving this free money on the table.

By Christy Bieber – Updated Nov 28, 2025 at 12:58 AM

Key Points

Employer 401(k) matches may be dollar-for-dollar or partial, often capped at a salary percentage.
Understanding vesting schedules is crucial as it affects when you can keep matched funds.
The maximum personal 401(k) contribution is $23,500 in 2025, with higher limits for older employees.

Many companies offer a 401(k) to their employees, and a lot of them also offer company matching as an extra benefit. A 401(k) company match is money your employer contributes to your retirement account, usually based on your own contributions and capped at a certain percentage of your income.

Here's a closer look at how 401(k) company matching works and how much you and your employer can contribute to your 401(k) each year.

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Businessman handing over money — Image source: Getty Images.

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Most people don't have to worry about running into these contribution limits, but high earners should be mindful of them.

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Related Retirement Topics

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When can you retire and collect Social Security? It depends on when you were born.

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About the Author

Christy Bieber is a contributing Motley Fool retirement and Social Security expert covering retirement planning, 401(k)s, IRAs, and other personal finance topics. Christy has written about finance since 2008 and previously taught business courses at Bryant & Stratton College. She holds a law degree from UCLA and a bachelor’s degree in English, media, and communication with a certificate in business management from the University of Rochester. In law school, she earned three CALI Awards for Excellence for the highest scores in civil procedure and contract law exams.

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