401k contributions explanation
I have a basic question on 401k investment. Below is what my company is matching:
XYZCompany will match your contributions, up to 4% of your eligible
compensation, to a maximum of ,600.
Now I have couple of questions:
If I am contributing 4% into my 401k account then what does it mean?
If I am contributing 15% into my 401k account then what does that mean?
If I am contributing 50$ into my 401k account then what does this mean?
Sorry for asking silly question. Any explanation will help me understand better how to go further and start contributing into my 401k account?
(1)1 Comments
Sorted by latest first Latest Oldest Best
Assume your salary is 0K.
Case 1: Your company will match up to 4% of your eligible compensation, to the maximum of 600, which in your case is 00.
Case 2: assume your salary is M. Now the company match maximum is 600, since 4% of your salary is more than that.
The company will match, meaning the company will only deposit the same amount you've deposited.
Deposit case A: Assume you deposited the maximum K (I think that's the maximum this year).
In the first case, the company will match up to 4% of your salary and will deposit K on your behalf.
In the second case the company will match up to 600 and will deposit that amount on your behalf.
Deposit case B: Now assume you only deposited K to your 401K. Now, in both cases the company will deposit K on your behalf, because it only matches your deposit, even if it limits the match by a higher amount.
Terms of Use Privacy policy Contact About Cancellation policy © freshhoot.com2025 All Rights reserved.