The 401(k) match is a pay rise you have to claim: 2026 limits and the arithmetic
A 50% match on 6% of a $60,000 salary is $1,800 a year of employer money. Left unclaimed for 30 years, at 7%, it is $170,000. The 2026 limit is $24,500, plus $8,000 over 50.
On November 13, 2025 the IRS set the 2026 limits for workplace retirement plans. The employee contribution limit for a 401(k), 403(b) or the federal Thrift Savings Plan is $24,500, up from $23,500. Workers aged 50 and over can add $8,000; those aged 60 to 63 can add $11,250 instead, under the higher catch-up that took effect in 2025.
| Limit | 2026 | 2025 |
|---|---|---|
| Employee contribution (401(k), 403(b), TSP) | $24,500 | $23,500 |
| Catch-up, age 50 and over | $8,000 | $7,500 |
| Catch-up, age 60 to 63 | $11,250 | $11,250 |
| SIMPLE IRA employee contribution | $17,000 | $16,500 |
| IRA (traditional and Roth combined) | $7,500 | $7,000 |
| IRA catch-up, age 50 and over | $1,100 | $1,000 |
The match
Most employers that offer a plan add money when the employee does. A common formula is 50 cents per dollar on the first 6% of salary; another is dollar for dollar on the first 3% or 4%. The plan document states the formula, and the formula is the only thing that decides what the match is worth.
6% of $60,000 is $3,600 from the employee. The employer adds 50% of that: $1,800. Contribute 3% and the employer adds $900 — the other $900 is left on the table. Contribute 10% and the employer still adds $1,800, because the match stops at 6%.
The match is an immediate return on the contribution — 50% in this formula, 100% in a dollar-for-dollar one — before any investment return. Nothing else in personal finance offers that, which is why the guide on debt against investing puts the match ahead of every debt except the most expensive.
Thirty years of the match
The employer's $1,800, invested each year at an assumed 7% return, compounds to about $170,000 after 30 years. That is the employer's money alone; the employee's own $3,600 a year grows to twice that. The 7% is an assumption, stated so it can be changed; the mechanism is compound growth.
Vesting
The employee's own contributions are always theirs. The employer's match may vest over time — a schedule under which a worker who leaves after one year keeps none or some of it, and after a set number of years keeps all of it. Plans use either a cliff (nothing, then everything at a set year, at most three) or a graded schedule (a rising share each year, fully vested within six). The schedule is in the plan document, and it is the first thing to read before changing jobs in the month before a vesting date.
Pre-tax or Roth
Most plans now offer both. A pre-tax contribution reduces this year's taxable income at the marginal rate; a Roth contribution does not, and withdrawals in retirement are tax-free. The match itself is always pre-tax money, unless the employer has adopted the option to make Roth matches, which few have. The Roth guide works through the choice.
Sources
- 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500Internal Revenue Service · checked Sep 24, 2026
- Retirement topics — 401(k) and profit-sharing plan contribution limitsInternal Revenue Service · checked Sep 24, 2026
- Retirement Savings Contributions Credit (Saver's Credit)Internal Revenue Service · checked Sep 24, 2026