What is the average 401k match?

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The most common way employers are providing a retirement benefit these days is through a defined contribution plan which is typically through a 401k match. An employee contributes a pre-tax percentage of their pay and the employer matches a specific percentage of that contribution. If your company has a 401k match you might be wondering how your company’s plan stacks up against the competition and just what is the average 401k match?

Bloomberg 401k Comparison Tool

One easy way to find out how your 401k match ranks against other public companies is to use this Bloomberg 401k comparison tool. The data used is from 2015 so it is not the most up-to-date but can still provide a reference on where to look for some of the top 401k matches.

The Bloomberg tool scores 401k plans based on the 401k match percentage, any additional contributions the employer provides, investments, how quickly you are fully vested in the plan, and if the plan auto-enrolls you.

In case you are not sure what these terms mean:

401k match – this is the amount or percentage that your employer pays into your 401k account

Additional Contributions – These contributions can be discretionary. If the company has a good year they might provide an additional match towards your 401k.

Investments – It is important to have a variety of assets to choose from in your 401k including stocks, bonds, and even international investments. All of the 401k plans I’ve participated in had many funds to choose from.

Vesting – This is the amount of time you are required to be an employee of the company to keep the full amount your company matches. For example, if the policy says you are fully vested after 5 years but you leave the company before those 5 years are up you will not receive the full amount of 401k contributions your employer made to your account. You still get to keep the full amount of contributions you made. The sooner you are fully vested the better.

Enrollment – The auto-enrollment feature is not that important. You should always contribute AT LEAST the minimum to receive the max benefit your employer is contributing.

Here are the top 401k plans according to the Bloomberg tool:

Average 401k Match

Some of the best matches from the list above are provided below.

ConocoPhillips clearly has the best match as an employee contributing just 1% of their salary can receive a match as high as 12%.

An employee at Boeing contributing 8% of their salary receives a company match of 6%. Even employees of McDonald’s who qualify to participate in the 401k plan receive a 300% guaranteed by just putting 1% of their salary into the plan.

CompanyEmployee ContributionCompany MatchAdditional Match 
ConocoPhillips1%6%0%-6%
Boeing8%6%
Amgen5%5%5%
Citigroup6%6%
McDonalds1%3%0

A few other 401k matches people want to know about include:

What is GE’s 401k match?

GE matches 50% up to 8% of the employee’s contribution for an all-in 4% match.

What is Walgreens’ 401k match?

This one was not provided by Walgreens but rather an employee at Glassdoor says they match up to 4%.

What is Fedex’s 401k match?

Once again I could not find Fedex’s 401k match details on their website directly. Glassdoor indicates the match is up to 3%.

What is Apple’s 401k match?

According to Glassdoor users, the match is up to 6%. It begins at 3% for employees less than 2 years, then increases to 4.5%, and eventually rises to 6% after 5 years of service.

The Average 401k Match

Unfortunately determining the average 401k match is a challenging proposition. Due to lack of detailed information from the companies directly, it is difficult to aggregate data to make a definitive conclusion. Even Bloomberg with all of their resources had trouble doing it.

The likely answer is somewhere around 3-4% of annual salary. I have worked for three public companies thus far in my career and have personally received a match as low as 2% and as high as 6%.

The Bottom Line

I have contributed up to 12% of my salary to the 401k but recently decided to diversify outside of the 401k plan and use other accounts for savings. Once you deposit pre-tax money in a 401k, it is tough to get it out without paying a penalty or taxes. Sometimes you can take out a 401k loan or for other hardships. Regardless, my personal finance saving strategy is to diversify into other savings accounts including a cash savings account for emergencies as well as a Roth IRA which will provide tax-free income in the future (when I expect my tax rate to be higher).

Always contribute what is required to receive the max your company is willing to match otherwise you are throwing away free money and benefits. According to Fidelity, the average 401k balance stands at $92,500. It’s good to see this average increasing (thank you stock market) but the truth is many people are not saving enough and planning for retirement. Time is a very important factor in the growth of your saving so don’t wait until your 40’s or 50’s to save. Start today!

 

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