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Comment by hartard | Hacker News Reader

Google matches the greater of something like 100% of $3000 - or - 50% of the max employee contribution.

A 100% match from Microsoft would mean an annual 2015 contribution of $36,000 ($18,000 employee + $18,000 employer match) versus $27,000 maximum ($18,000 employee + $9,000 employer match) from Google. That's a $9000 difference.

EDIT: Looks like the article is incorrect. Correct numbers are 50%, as stated in parent comment.

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They mean they are matching your entire contribution at 50%, not part of your contribution at 50%

You're wrong. MS does 50%.

Read the announcement. MS now does 100% matching.

No. They are increasing from 50% of 6% to 50% of all deferrals. So the maximum before was like $540 if you put in $18,000. Now its $9000.

"Retirement readiness is an important part of overall financial wellness, so beginning Jan. 1, 2016, we’ll increase the company’s 401(k) match from 50 percent of the first 6 percent that employees defer, to 50 percent of all regular deferrals."

I don't think that's plausible. More likely the match was 50% of the first 6% of salary employees deferred. That would require an employee to earn $300,000 in order to see a maximum $9,000 match. Now an employee can receive the full match merely by deferring the maximum amount, regardless of their salary.

6% refers to 6% of salary, not 6% of deferrals. 401k contributions are measured in terms of percentage of pre-tax salary contributed, and the match is based on that.

Under the old scheme, you had to contribute at least 6% of your pre-tax salary to get the maximum match, which was 50% of whatever that value was. In other words, the maximum match was 3% of your salary, and you had to be contributing at least 6% of your salary to get that. Now, anything you contribute gets matched at 50%, regardless of what your salary is.

You are completely wrong.

Pretend I made $100k, contributed $6k -- they matched an additional $3k into the account.

The match was considerably more than $540 @ $18k.

Source: I work there.

You are correct. The article incorrectly quoted the source:

"we’ll increase the company’s 401(k) match from 50 percent of the first 6 percent that employees defer, to 50 percent of all regular deferrals. With the current IRS regular deferral limit of $18,000, this means employees will have the opportunity for Microsoft to match their contributions up to $9,000 per year."

Well, the article is wrong. Here's Microsoft's actual announcement:

https://blogs.microsoft.com/blog/2015/08/05/the-employee-exp...

Nobody knows. Microsoft's own release makes no sense. You (and your employer, combined) cannot contribute more than $18,000 tax-free per year. It's either 100% match of $9,000 on your $9,000 to make $18,000, or it's 50% match of your $12,000 to make $18,000. It can't be both things that the press release says it is.

My best guess is that they meant to say they now match 100%, but we won't know for sure until they correct the press release.

Actually, employer contributions do not count towards the $18k maximum per year in contributions. This is the specific advantage of having a 401k match in the first place, as it allows employees to have more tax deferred savings than otherwise possible.

Source: http://www.bankrate.com/finance/retirement/employer-match-co... (Technically, with employer match, it can go up to $53k)

Can also go up to $53K with after tax employee contributions, which can be rolled out into a Roth IRA upon separation from the employer.

That's not allowable under law. The max is $18k (unless you're subject to the catch-up provisions over age 50 or 55 or whatever it is).

You're incorrect. Employers are allowed to contribute to an employee's 401K plan up to a $53,000 combined limit. The $18K limit applies only to employee contributions.

The employer match does not count towards the $18k limit.

Unrelated, but Wall Street parasite fees do count towards your contribution limit. And 401k plans mostly offer high fee funds. So be careful or you might think you're contributing $18k but you're actually only contributing $17k and making an annual $1k gift to some some banker's bonus. Also, 401k is a massive Wall Street scam.

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