What is a 401(K) Match?

A 401(k) match refers specifically to the contributions made by an employer that are equivalent to the contributions made by an employee to their 401(k) retirement savings plan, up to a certain percentage or dollar amount. This feature is designed to incentivize employees to save for retirement, as the employer's contribution effectively boosts the employee's retirement savings.

The employer typically matches a portion of the employee's contributions, often up to a specific limit, encouraging workers to save more. This matching process can greatly enhance the overall retirement savings of the employee, making 401(k) plans a valuable tool for retirement planning.

Understanding the other options provides context of what a 401(k) match is not. An additional retirement account does not capture the employer's matching contribution aspect, while describing it as a type of savings account with tax benefits overlooks the employee-employer dynamic inherent in a matching scenario. Additionally, stating that funds are provided only for healthcare expenses mischaracterizes the purpose and function of a 401(k) plan, which is strictly aimed at general retirement savings rather than specific medical-related disbursements.