How does an employer benefit from a 401(k) matching plan?

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December 2016
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Employers benefit in 4 primary ways:

  1. It allows them to attract new talent by offering employer matching contributions to a prospective employee’s retirement.
  2. It gives them a tax deduction for the contributions they make.
  3. Providing the plan remains in compliance with all required testing, it allows owners and other highly paid employees the opportunity to also defer funds for retirement.
  4. In some cases, matching contributions are not immediately vested, meaning the company gives them to you, but they don’t completely belong to you until you satisfy some period of time under continuous employment. Vesting schedules can encourage any employees who were considering a job change to reconsider or delay leaving, given the benefits they might be leaving on the table.
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