Can You Have a 401(k) Without an Employer Match?

Most employers will contribute to your 401(k), but it’s generally optional

As a benefit to employees, employers often offer matching contributions up to a limit to the contributions that employees make to their 401(k) plans. For example, an employer may match your contributions for up to 3% of your salary. However, employers aren’t required to make contributions to your retirement account, and some 401(k) plans have no employer match

In this article, we’ll look at how employer matches work and what to do if you are among the employees who don’t benefit from one.

Key Takeaways

  • Most traditional 401(k) plans offer employer-matching contributions, but they are not required to do so.
  • A 401(k) has significant benefits even without an employer match, including tax benefits.
  • Roth 401(k) contributions are taxed today, but earnings grow tax-free and are not taxable when taken as a qualifying distribution at retirement.
  • Traditional 401(k) contributions may provide immediate tax deductibility that reduce your current tax liability if you meet specific income thresholds.
  • One main difference between a 401(k) and an IRA is a potential contribution match; otherwise, there are material contribution limit differences.

How Many Employers Offer 401(k) Matches?

The Vanguard Group compiled a study called How America Saves 2022 to publicly communicate what employer retirement plans usually look like. Most companies with 401(k) plans today offer some kind of employer match. In 2021, 72% of companies offered plans that allowed employees to contribute immediately. Meanwhile, 18% had plans that required one year of service before the employer would match contributions.

Most retirement plans had fairly lax vesting schedules, as 48% of survey participants were enrolled in a plan in which they were immediately vested for matched contributions. One in four surveyed reported being in a five or six year vesting schedule for matched contributions.

There are four types of match types; each type along with the percentage of plans that offered this type of match are below.

  • 71% of plans offer single-tier formula (i.e. a fixed dollar amount on a fixed percentage, such as "$0.50 per dollar on 6% of pay")
  • 22% of plans offer a multi-tier formula (i.e. a fixed dollar amount on a fixed percent, then a different fixed amount on a percent. An example is "$1 per dollar for the first 3% of pay, then $0.50 for the next 3% of pay.")
  • 5% of plans offer dollar caps (i.e. a formula that restricts to a certain dollar amount, such as $2,000)
  • 2% of plans offer variable formulas based on other criteria.

In addition to the match types above, Vanguard collected information on the specific match formulas. The top three most common 401(k) matches were:

  • 50% employer match on 6% of employee's pay (16% of plans)
  • 100% employer match on 6% of employee's pay (10% of plans)
  • 100% employer match on 3% of employee's pay, then 50% match on 5% of employees pay (9% of plans)

The rules for traditional 401(k) plans do not require employers to make matching contributions. However, safe harbor 401(k) plans, typically used by small businesses, require that the employer make either a matching contribution or a nonelective contribution. Similar rules apply to any 401(k) with an automatic enrollment feature.

What to Do If Your Employer Doesn’t Match

If your 401(k) plan has any kind of employer match, consider funding your account at least up to that amount to get the full benefit. If your employer doesn’t offer a match, investing in your 401(k) still has advantages, especially if it has a variety of asset options that match your investing goals.

As a tax-advantaged retirement account, you can deduct your contributions from your taxable income. You can contribute substantially more to a 401(k) than to an individual retirement account (IRA), so you can take a larger tax deduction. The maximum that you can contribute to:

  • A 401(k) in 2022 is $20,500 if you’re under age 50 or $27,000 if you’re 50 or older.
  • A 401(k) in 2023 is $22,500 if you're under age 50 or $30,000 if you're 50 or older.
  • An IRA in 2022 is $6,000 if you don't qualify for catch-up contributions or $7,000 if you do.
  • An IRA in 2023 is $6,500 if you don't qualify for catch-up contributions or $7,500 if you do.

However, if your 401(k) doesn’t offer the investment options that you want, or if you have concerns about how it is managed, you have other options. For example, you could fund an IRA up to the limit and put any additional money into a regular mutual fund or brokerage account. You won’t enjoy the same tax advantages in a typical brokerage account, but you can invest toward building your retirement savings.

What Is the Maximum Employer Match for a 401(k)?

By law, total contributions to an employee’s 401(k) plan can’t exceed 100% of an employee’s compensation or be over a certain dollar amount. In 2022, the limit for total contributions is $61,000 for employees under age 50 and $67,500 for those ages 50 and older. In 2023, the limit for total contributions is $66,000 for employees under age 50 and $73,500 for those ages 50 and older.

There is also a limit on how much of an employee’s income the plan can use to calculate a match. In 2022, the limit is $305,000. In 2023, the limit is $330,000.

Can an Employer Change its 401(k) Match?

With a traditional 401(k), the employer can change or even eliminate its match from year to year. With a safe harbor 401(k), however, the employer must make either a matching contribution or a nonelective contribution.

How Does Vesting Work in a Safe Harbor 401(k)?

Both employee contributions and employer contributions to a safe harbor 401(k) are immediately 100% vested. With a traditional 401(k), the plan can stipulate that matching contributions vest over a period of time.

The Bottom Line

Most 401(k) plans offer some kind of employer matching contribution, although the formula for calculating it—and how soon the money will actually belong to the employee—can vary from one employer to another. Even if your employer doesn’t provide a match, you may still want to contribute to the plan so you can enjoy the immediate tax deductions and years of tax deferral that a 401(k) offers.

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. Vanguard. "How America Saves 2022." Page 11.

  2. Vanguard. "How America Saves 2022." Page 17.

  3. Vanguard. "How America Saves 2022." Page 19.

  4. Vanguard. "How America Saves 2022."

  5. Internal Revenue Service. “Operating a 401(k) Plan.”

  6. Internal Revenue Service. "401(k) Limit Increases to $22,500 for 2023, IRA Limit Rises to $6,500."

  7. Internal Revenue Service. “Retirement Topics — 401(k) and Profit-Sharing Plan Contribution Limits.”

  8. Internal Revenue Service. "Retirement Topics - 401(k) and Profit-Sharing Plan Contribution Limits."

  9. Internal Revenue Service and U.S. Employee Benefits Security Administration. “401(k) Plans for Small Business,” Pages 4–5 (Pages 6–7 of PDF).

  10. Internal Revenue Service and U.S. Employee Benefits Security Administration. “401(k) Plans for Small Business,” Page 6 (Page 8 of PDF).

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