When considering a new employer they'll want somewhere to transfer their money, the opportunity to see it continue to grow, and the ability to continue to add to it. Health and retirement plans provide the biggest building blocks in most benefit packages. When these are strong components they can be a big influence on employee retention. Matching contributions provide an arrangement where the company adds to the amount an employee saves by matching a percentage of employee contributions. A plan may also provide for discretionary contributions, which allow the employer to make additional contributions as they wish.
Elective contributions belong to participants from the time they are put in the plan.
However, stricter rules may be applied to employer contributions and matching money. This means that an employee may have to remain with the company a certain length of time before the matching money and any earnings are a permanent part of his or her personal fund. There are three vesting schedules for non-elective and matching contributions. But, there are several advantages to making matching contributions. As mentioned above, these contributions strengthen a plan and its total benefit to a company.