Understanding What Makes a Good 401k Match in 2025

Many Americans dream of retiring comfortably after decades of work, and a 401(k) retirement plan stands as one of the most reliable tools to make that dream a reality. If your employer offers a 401k match, recognizing what constitutes a good 401k match can significantly impact your financial security in your golden years. Here’s what you need to know about employer matching contributions in 2025 and how to ensure you’re getting the most out of your retirement savings.

Why Your 401k Match Matters for Long-Term Wealth Building

An employer match represents free money added to your retirement account—essentially a form of compensation beyond your regular salary. When your company offers a good 401k match, it’s one of the easiest ways to boost your retirement nest egg without additional effort on your part. According to data from Empower, those in their 60s have an average 401(k) balance hovering around $573,624. However, workers who fully capitalize on employer matching contributions throughout their careers typically accumulate significantly more.

The power of a good 401k match becomes even more apparent when you consider the compounding effect over decades. That “free money” grows exponentially, potentially adding hundreds of thousands of dollars to your retirement fund by the time you stop working. This is why financial advisors consistently emphasize: don’t leave employer-matching contributions on the table.

How Employer Matching Actually Works

At its core, an employer match functions as a percentage-based contribution that mirrors your own savings efforts. For example, if you contribute 4% of your salary to your 401(k), your employer might add another 4%—doubling your contribution to 8% total. The specifics depend on your company’s plan structure, but understanding the mechanics helps you make informed decisions about how much to contribute.

The key takeaway: to receive the full employer match, you typically need to contribute at least the minimum required percentage of your salary. Falling short means forgoing that free money—a costly mistake in terms of long-term retirement security.

What Counts as a Good 401k Match in 2025?

Based on 2025 data, the average 401(k) employer match ranges from 4% to 6% of an employee’s total compensation. However, not all matches are created equal. The most prevalent matching structure is a 50% partial match, meaning employers contribute 50 cents for every dollar you contribute, typically capped at 6% of your salary.

To illustrate: if your salary is $100,000 and your employer offers a 50% match up to 6%, you would need to contribute 6% ($6,000) to receive the full employer contribution of 3% ($3,000). Some companies offer more generous structures with 100% dollar-for-dollar matching on a percentage of your salary, while others provide 25% to 50% partial matches with varying caps.

An important regulatory limit exists: employers cannot contribute more than 25% of an eligible employee’s annual compensation toward their 401(k). This cap ensures fairness and compliance with federal retirement savings rules.

Identifying and Maximizing Your Good 401k Match

If you’re fortunate enough to work for a company offering a good 401k match, your priority should be contributing enough to capture the full employer benefit. This isn’t just smart planning—it’s a guaranteed return on your money that you literally cannot get elsewhere.

Start by reviewing your company’s 401(k) plan documents to understand the exact matching formula. Determine the minimum contribution percentage required to unlock the full match. Then adjust your payroll deductions accordingly. Many employers also allow you to increase contributions during annual enrollment periods or when you receive a raise.

The bottom line: a good 401k match is one of the most valuable employee benefits available. By understanding how your specific match works and ensuring you contribute enough to receive it fully, you’re taking a significant step toward building the retirement security you deserve.