Employer-sponsored retirement plans offer very high salary contribution limits.
The amount of money that can be saved for retirement on your behalf, however, isn’t limited to your own contribution cap.
Here’s how to max out your yearly contribution to a 401(k) account with money that isn’t yours.
Does your employer offer a 401(k) plan? If so, congratulations! Only a little more than half of the United States’ private sector workers have access to any sort of workplace retirement savings accounts. If you’re one of the lucky other half, you might want to make a point of taking full advantage of what plenty of other people can’t.
There’s one particular 401(k) mistake you absolutely don’t want to make in 2026, or for that matter, any other year.
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401(k) plans are retirement accounts an employer offers its workers, allowing them to defer a portion of their paychecks into these accounts before it’s taxed. Although few people actually “max out” their yearly contributions to these vehicles, they’re still popular because these annual contribution limits are quite high. This year’s ceiling on elective deferrals is $24,500, and that’s even higher if you’re over the age of 50.
Failing to contribute this maximum isn’t the mistake to avoid making, though. Most workers can’t afford to do without that much of their paycheck. Rather, the misstep is failing to at least put enough of your own money into a 401(k) account to maximize the amount of money your employer is willing to contribute to the same account on your behalf.
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It’s true! Although every 401(k) plan is a little bit different, most of them call for an employer match of anywhere between 50% and 100% of the amount of their own money the employee is contributing, up to 6% of those individual workers’ salaries.
The numbers aren’t insignificant. For perspective, mutual fund giant and retirement plan administrator Fidelity reports that employers chipped in an average of $4,920 per employee for the retirement plans it administers last year, or more than half the $9,080 these workers also contributed on their own. That free money is effectively an immediate 54% return on these employees’ savings just for contributing to the plan. In the meantime, all this money is invested for growth on behalf of these workers.
There is one important footnote to add here. You’ll only get to keep all (or some, or any) of your employer’s matching contributions — and any investment gains they produce — if you’ve been with the company and participating in its 401(k) plan for long enough.
While every plan’s vesting rules can be different, your employer’s contribution to your retirement typically won’t be fully yours to keep until you’ve been a participant in the plan for anywhere from three to six years. That being said, most employers also offer a graded schedule for longer-term vesting requirements, allowing you to keep progressively more and more of this match as time marches on if you’re not yet 100% vested.
Regardless, it’s still free money sooner or later. It would be unwise to pass it up, even if it means you need to tighten your belt a bit to make it happen. You certainly won’t find a better return on any of the investment options available within the plan itself.
So, get to it. If you haven’t yet, find out what your employer’s maximum match is and make a point of contributing at least that amount into your 401(k) this year.
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