Question 1

What is a two-tier employer match?

Accepted Answer

A two-tier employer match means your employer matches your 401(k) contributions at different rates depending on how much you contribute. For example, a common formula is 100% match on the first 3% of salary you contribute, plus a 50% match on the next 2%. In that case, contributing 5% of your salary gets you the maximum match of 4% of salary.

Question 2

How do I know the minimum contribution to maximize my employer match?

Accepted Answer

Add up the contribution percentages from each tier of your employer's match formula. For a plan that matches 100% of the first 3% and 50% of the next 2%, you need to contribute at least 5% (3% + 2%) to receive the full match. Any contribution below that threshold means you're leaving free money on the table.

Question 3

What is the 2025 401(k) contribution limit?

Accepted Answer

For 2025, the Internal Revenue Service (IRS) allows employees under 50 to contribute up to $23,500 per year to a 401(k). Those aged 50 and older can make an additional catch-up contribution of $7,500, for a total of $31,000. Employer match contributions do not count toward the employee limit.

Question 4

Does contributing more than the match threshold help?

Accepted Answer

Contributing above the match threshold won't earn you additional employer match, but it still grows tax-deferred (traditional 401(k)) or tax-free (Roth 401(k)). Many financial planners recommend contributing 10–15% of salary for retirement. The match gets you free money; contributions above that grow your own savings.

Employer Match Optimizer

Your Plan Details

Optimal Contribution

Annual Free Money

Money Left on Table

Contribution vs. Employer Match

Contribution Breakdown