Why 401(k)? - 401(k) Plans

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Take Home Pay

The Match

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Why should I contribute to a 401(k) retirement savings plan?

Reason #3:
An array of excellent investment opportunities are available to meet your retirement planning objectives.

One of the most valuable features of the 401(k) plan is a company "match". A match simply means the employer will kick in additional money for every dollar the employee puts in, usually within limits.

For example, a match formula might be "100% match up to 15%". Under this formula, an employee who puts in 5% will get an additional contribution made by the employer of 5%.

Based on the pre-tax reduction of your taxable income, you do not pay current federal or state (except Pennsylvania) income taxes on your contribution. Over time, deferral of taxes and compounding of interest make a big difference in the amount of money you will accumulate.

View the example below.

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Example: The Match

Deferral %	0%	5%	8%	10%	15%
Gross Pay	$35,000.00	$35,000.00	$35,000.00	$35,000.00	$35,000.00
-Pretax Deferral	$0.00	$1,750.00	$2,800.00	$3,500.00	$5,250.00
Taxable Gross Pay	$35,000.00	$33,250.00	$32,200.00	$31,500.00	$29,750.00
+Match	$0.00	$1,750.00	$2,800.00	$3,500.00	$5,250.00

Ownership or vesting of employer match and ther earnings is determined according to plan specification.

Example: The Invisible Match

Deferral %	0%	5%	8%	10%	15%
Gross Pay	$35,000.00	$35,000.00	$35,000.00	$35,000.00	$35,000.00
-Pretax Deferral	$0.00	$1,750.00	$2,800.00	$3,500.00	$5,250.00
Taxable Gross Pay	$35,000.00	$33,250.00	$32,200.00	$31,500.00	$29,750.00
-Social Security	$2,677.50	$2,677.50	$2,677.50	$2,677.50	$2,677.50
-Federal Tax	$5,200.00	$4,727.00	$4,444.00	$4,255.00	$3,782.00
-CA State Tax	$1,206.16	$1,066.16	$994.36	$952.36	$847.36
Take Home Pay	$25,916.34	$24,779.34	$24,084.14	$23,615.14	$22,443.14
Deduction Net Pay	$0.00	$1,137.00	$1,832.20	$2,301.20	$3,473.20
+Tax Savings	$0.00	$613.00	$967.80	$1,198.80	$1,776.80