What does dollar for dollar up to five percent mean?

Contribute five percent of salary and the employer adds five percent. Contribute three and they add three. Contribute eight and they still add five, because that is the cap.

InvestmentretirementUnited States only

401(k) Employer Match Calculator

Employer match earned against the maximum available. A dollar-for-dollar match is a hundred percent instant return, which is more than any investment reliably provides.

Also called: employer match calculator, 401k matching.

Employer match this year

$3,800.00

$3,800.00 from the employer this year. That is 950 short of the maximum, forfeited permanently. Contributing the full 5% would earn $4,750.00, and over 20 years the difference compounds to $38,945.72.

Maximum available match

$4,750.00

Left unclaimed each year

$950.00

Your contribution

$3,800.00

Instant return on your contribution

100%

Compounded value of the shortfall

$38,945.72

On the shortfall

That is 950 short of the maximum, forfeited permanently.

How this is calculated

An estimate, not an offer or a guarantee. Projected returns assume the rate you entered holds for the whole term, which no market does.

Method and background

This is what the calculation gives for the numbers you entered. It is an estimate, not advice, and it knows nothing about your situation beyond those numbers. Rules for United States change on a published schedule; the effective date is shown on every rule-based tool.

How this is calculated

The match applies to the smaller of what you contribute and the capped share of salary. Contributing below the cap forfeits the difference permanently: unlike a missed investment opportunity, it cannot be made up later. The compounded value of that annual shortfall over the working years is shown because the annual number understates it badly. A dollar-for-dollar match is a hundred percent return before the money has done anything.

the match applies to the lower of what you contribute and the capped share of salary

c: Your contribution
s: Salary

Worked examples

Each of these is asserted on every build. If a change to the engine ever moved one of these answers, the build would fail before the page could print it.

contributing below the cap

Annual salary: $95,000.00
You contribute: 4%
Employer matches: 100%
Up to this share of salary: 5%
Years: 20
Annual return: 7%

Employer match this year$3,800.00

4% matched fully; the cap is 5%

Open this example

contributing above the cap earns no more

Annual salary: $95,000.00
You contribute: 10%
Employer matches: 100%
Up to this share of salary: 5%
Years: 20
Annual return: 7%

Employer match this year$4,750.00

boundary: the cap binds

Open this example

Method and limits

What it assumes

The match structure stays constant, and vesting is ignored.

What it deliberately does not model

Vesting schedules can claw back employer contributions if you leave early.
Some plans use a true-up at year end, which changes the arithmetic for uneven contributions.

Formula version 1.0.0 · definition 1.0.0 · United States · Report a problem with this calculator

Frequently asked questions

What does dollar for dollar up to five percent mean?: Contribute five percent of salary and the employer adds five percent. Contribute three and they add three. Contribute eight and they still add five, because that is the cap.