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An employer match is one of the most valuable features of many 401(k) plans. Even without an employer match of your contributions, however, a 401(k) can still be useful for retirement savings. The tax-deferred growth and the potential for disciplined, automatic contributions make it an option worth considering. If your 401(k) plan doesn't match your contributions, deciding whether to contribute involves weighing factors such as alternative investment opportunities and the broader role your 401(k) might play in your overall retirement strategy.
Talk your financial objectives over with a financial advisor to develop a retirement savings strategy.
An employer 401(k) match is a financial contribution made by the employer to an employee’s retirement account. It is typically based on the employee's own contributions. Employer matching can be a powerful incentive to save because it effectively offers free money to employees who elect to participate.
Matches are often structured as a percentage of the employee's salary, with a cap. For example, an employer might match 50% of the first 6% of the employee's salary that the employee contributes. This means if you contribute 6% of your salary, the employer adds an amount equal to 3% of your salary to your 401(k). If you contribute more than 6%, there will be no matching contribution, however.
In addition to matching only a portion of the employee contributions, these contributions often come with other limitations. For example, employees often don't immediately have full ownership of employer matching contributions. Vesting schedules determine when employees gain full ownership of matched funds. Vesting periods can range from immediate to several years and understanding the match formula and vesting requirements is key to maximizing the value of an employer-sponsored 401(k).
Another benefit of employer matching is that employer contributions don't count against the cap on 401(k) contributions by the employee. For 2025, this limit is $23,500. The cap on total 401(k) contributions including employee and employer contributions still applies, however. For 2025, this cap is $70,000.
These plans also offer other benefits, such as tax benefits and long-term investment growth. These advantages can still make it worthwhile to contribute without additional employer contributions.
Even without an employer match, a 401(k) can still be a valuable tool for retirement savings, offering tax advantages, convenience and opportunities for disciplined investing. Here are seven key reasons to consider contributing regardless of whether your employer offers matching contributions:
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Tax-deferred growth: Contributions are made pre-tax, lowering your taxable income, and investment earnings grow tax-free until withdrawal.
Automatic payroll deductions: Consistent, automated contributions help establish disciplined saving habits with minimal effort.
Diverse investment options: 401(k) plans often provide access to professionally managed funds, such as low-cost index funds and target-date funds, simplifying investment choices.
Tax planning benefits: For higher earners, contributing can help reduce taxable income, potentially keeping you in a lower tax bracket.
Long-term savings strategy: Even without matching, the tax advantages and compounding growth of a 401(k) can significantly boost your retirement savings over time.
Higher contribution limits: Even without a company match, a 401(k) offers higher contribution limits when compared with individual retirement accounts (IRAs). The IRS lets you contribute up to $23,500 to a 401(k) in 2025, plus another $7,500 if you're 50 or older.
Super catch-up contributions: Savers between ages 60 and 63 can save an extra $11,250 in a 401(k) – for a total of $34,750 – thanks to a provision of SECURE Act 2.0.
If your employer doesn't offer a 401(k) match, exploring alternative retirement savings options can help you maximize your investment potential. Here are three common alternatives and their benefits compared with making contributions to a non-matching 401(k):
Individual retirement accounts (IRAs): Traditional and Roth IRAs provide tax advantages and often come with more investment choices than a 401(k). A Roth IRA, for example, allows tax-free withdrawals in retirement, making it a compelling option if you expect to be in a higher tax bracket later. For 2025, you can contribute up to $7,000 to an IRA if you are younger than 50, and up to $8,000 if you are 50 or older.
Health savings accounts (HSAs): If you have a high-deductible health plan, an HSA offers triple tax benefits: tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses. Unused funds can even be used for retirement after age 65. For 2025, you can contribute up to $4,300 to an HSA and $8,550 as a family.
Taxable investment accounts: While these accounts don't offer tax advantages, they provide unlimited contribution amounts and complete flexibility in investment choices and withdrawal timing, making them a useful supplement to retirement savings.
While some companies may choose to temporarily curtail or eliminate their 401(k) matching contributions in response to economic uncertainty or lagging performance, the overall data does not seem to support a significant trend toward eliminating 401(k) matches.
According to the most recently published "BrightScope/ICI Defined Contribution Plan Profile: A Close Look at 401(k) Plans” report from 2021, nearly nine out of 10 large 401(k) plans – those with at least 100 participants – offered employer contributions in 2021. This figure hasn't changed much in recent years.
The percentage of all 401(k) plans with employer contributions did decline noticeably from 78% in 2008 to 72% in 2011. However, that number has since rebounded, reaching 81% in 2021, according to the BrightScope/ICI report released in August 2024.
Furthermore, 90% of all 401(k) participants in 2021 were enrolled in a plan that included company contributions. Meanwhile, 97% of the largest 401(k) plans (those with more than $1 billion in assets) included employer contributions in 2021 – up from 91% in 2007, the same report found.
This consistency suggests that the “401(k) no matching trend” is not widespread among large employers. In fact, a large majority of participants in these plans continue to benefit from employer contributions, indicating that matching remains a common feature in 401(k) offerings.
Choosing whether to contribute to a 401(k) without a matching benefit depends on individual financial goals and circumstances, but the plan's tax advantages and simplicity often make it a compelling option. Alternatives like IRAs, HSAs and taxable investment accounts can complement or replace a 401(k) in certain scenarios, offering flexibility and unique benefits. While employer matching remains prevalent, exploring a diverse range of savings strategies ensures a well-rounded approach to building retirement wealth.
A financial advisor can help you mitigate risk for your portfolio. Finding a financial advisor doesn't have to be hard. SmartAsset's free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you're ready to find an advisor who can help you achieve your financial goals, get started now.
If you want to know how much your 401(k) account balance could grow over time, SmartAsset's 401(k) calculator can help you get an estimate.
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