The difference between an employee-sponsored 401k account and self-directed 401k is the organization coordinate. Companies match each employee's contributions to their 401k up to a certain percentage or monetary value. In order to reach the full potential of your company's 401k, you need to determine the limits of a company 401k match.

Examine the percentages and factors used in your company match if a multi-tier match is utilized. A multi-tier company match means that the employer provides a full match up to a certain contribution level and a match that decreases by steps for higher contributions. Simplify your 401k contribution experience with a proportional matching option through your employer.

Proportional matching means that the company will match your funds at a steadily decreasing level in proportion to your contribution.

Company 401k Match

Assess your 401k contribution totals for the next few months by adding on an employer's fixed monetary match to your own contribution. Fixed matches assign a specific dollar value to each employee's 401k account to provide a steady funding source without concern about factors and proportions.

Begin to calculate your employer's contribution to your retirement account by assessing the deferral level you are comfortable with. You should figure this number out with your monthly budget in mind instead of your employer match.

Reconfigure your ideal deferral level per paycheck in relation to the employer match to determine how much of a contribution you will make toward retirement. You should adjust deferrals if your ideal amount exceeds the company match option or comes close to the maximum amount for annual employee contributions.

Exceed the contribution level affected by company 401k matches if your particular fund provides high yields. A high number of professionals fail to exceed company matches because they do not feel it is a worthwhile investment.

You should invest as much as legally possible to get your company match and put aside money for retirement.

Separate your contributions and employer contributions to a 401k account for tax purposes. Employers have a higher threshold for annual contributions to sponsored retirement accounts than workers because of their higher financial resources.

Tips & Warnings Maintain contact with your benefits representative at work to determine changes to your company match. Companies often adjust their matching amount as they expand, in order to keep talented professionals in the fold. You may need to adjust your contribution per paycheck in order to maximize changes in match by your employer.

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Written by

Patrick Harwood

Patrick Harwood has been a professional writer and editor since 2004, specializing in articles about spectator sports, personal finance and law. He has contributed to family of magazines and websites.