Make Them Match

What to do if your company doesn’t match 401(k) contributions

You likely know by now that you should be contributing as much to your 401(k) as possible. You’ve also been told (more than once) that if your employer matches any or all of your contribution grabbing those matching dollars is job one. But what do you do when there is no match? Well, you try to sell your boss on adding the match, and if that doesn’t work, you move on to other options.

Here’s why you want that 401(k) match: In 2019, 401(k) annual contribution limits increase from $18,500 to $19,000. If your employer doesn’t match that $19,000, you’re missing out on a lot of cash. One reason your employer might not want to match 401(k) contributions is that they think it will be a financial nuisance. So you’re going to want to start there. Explain to your HR department head or boss that every 401(k) match dollar from an employer counts as income for that same employee, which means a lower taxable income and tax bill for the company. Yes, the money is eventually taxed when the employee takes out funds for retirement, but that’s way down the road. You can also mention that they can choose a plan that allows them to make changes as the years go by. And as USA Today reports, when companies add 401(k) matches, employee loyalty increases. Explain to your boss that the match will help them attract and retain stellar employees — like yourself.

If convincing your employer to add a 401(k) match doesn’t work, you can then decide if and when an IRA makes sense instead. The big advantage to a 401(k) is that it’s automatic. Money comes out of your paycheck before you a) see it, b) touch it and c) spend it. That’s a big deal. But not all 401(k)s have low fees and great investing options. An IRA can provide those things if your plan falls short. Then set it up to automatically makes withdrawals from your checking account. And if at all possible, contribute to both a 401(k) and an IRA. The more you’re saving for retirement, the better. Even if your company doesn’t budge on the matching move.

Chris O'Shea

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