401(k) match

An employer match is a stated rate applied to a stated slice of pay, not a share of whatever you happen to put in. The common quote, a 50 percent match on the first 6 percent, means the plan pays fifty cents for each dollar you defer until your deferral hits 6 percent of pay, and nothing extra after that. Defer 6 percent of pay and the match is 3 percent of pay. Defer 3 percent and you capture half. Defer 10 percent and the match is still 3 percent of pay: the extra 4 percent is yours alone.

The identity is $M = S \times \min(d, c) \times m$, where $S$ is salary, $d$ the deferral rate, $c$ the cap the match applies to and $m$ the match rate. The employer match calculator is that formula, plus what an unclaimed stream grows to if it is invested. Inside the cap, each unit you defer brings a matching fraction with it before any market return. Past the cap, the next unit brings nothing extra from the employer, which is why the usual order is: take the whole match, then look at the rest of the tax deferred picture.

The match cap is a percent of pay. The annual contribution limit is a separate ceiling and, in the United States, counts your deferral rather than the match. Hitting the match cap and hitting the annual limit are two different ceilings and they do not move together. Vesting sits outside the arithmetic: some plans hand the match over as it is paid, some require years of service. The match in a US workplace plan is typically pre-tax on the way in even when your own deferral is Roth.