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What's a matching contribution?

Lots of defined contribution plans come with a bonus: a matching contribution from your company. The match can often be 50 cents to a dollar for every dollar you contribute, up to a set maximum - perhaps 3% to 6% of your salary, or in some cases a dollar limit. The match is free money! And it effectively increases your income without increasing your tax bill, since you pay no taxes on matching contributions until you withdraw them in retirement.

The employer's match money typically "vests" over three or four years, meaning you have to keep working for the company for that amount of time before all the matching funds are yours to keep.

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