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Benchmarks for 401k Match: Tech Company with 100+ Employees

We're currently evaluating our company's 401k match program. We are a technology and services company with just over 100 employees. During the hiring process, we often have recruits (coming from larger organizations) complain about our current 401k match level. My own career experience with start ups over the past 10 years limits my ability to judge this area (I haven't experienced a 401k match program over these 10 years). Although, during the first 15 years of my career, the larger companies I worked for did have some generous 401k programs. Would be interested in getting information from any CFOs about your own company's 401k match program if you fit the profile I'm seeking. Thanks for any input!


James Scott
Title: Consulting CFO
Company: Early Growth Financial Services
LinkedIn Profile
(Consulting CFO, Early Growth Financial Services) |

I have worked for 5 tech companies in the last 18 years, only 1 had an employer 401k match and it was capped at 3%. Each did have a 401k plan. We surveyed the folks at a recent employer and found that a 401k match was less important that total comp, bonuses, flex time, training reimbursement and health care cost. We did get complaints from a few folks before, and after hiring. And it was always important in the survey to 3-6% of our employees. I doubt you would ever lose the right recruit over a 401k match, and it never was on the exit interview list or reasons for the 100+ folks processed over that time period. My bet would be that the folks coming from larger companies and complaining will also not be a good match for your company, your culture is what it is and that issue is only a very small part of it.

John Barrett
Title: COO/Acting CFO
Company: Wiley X
(COO/Acting CFO, Wiley X) |

At a minimum you should match 4% to participants or 3% to everyone regardless of participation to safe harbor your plan.

Ravi Kaushal
Title: Vice President
Company: Welspun USA Inc
(Vice President, Welspun USA Inc) |

I see at couple of places 4% match for participants and none to 3% for non-participants.

(VP of Finance) |

We're similar size as you are, based in Silicon Valley. We match 100% on the first 3%, and 50% on the next 3%, with no vesting schedule, which is more generous than a lot of other places we hear about. When I worked at a Big Four firm, the match was 50% on the first 3%, with a vesting schedule.

Every once in a while someone complains about it and wants a bigger match, but in my experience, this is never a reason for them to leave or join one company or another.

(Manager) |

3% match seems to be the most common I have encountered - either as 50 cents for each dollar contributed up to 6% of pay or dollar for dollar up to 3% of pay. The majority of clients I consult with have one of these two arrangements.

In the past, I've worked for 3 tech companies with 401k plans - only 2 of them offered a match, and both were 50 cents for each dollar contributed up to 6% of pay - so the total match was capped at 3%. One of those was a very large employer, and the other was a start up with just under 100 employees. The start up was eventually purchased by a much larger company, and they offered the same 401k match that we already had in place.

My husband works for a school (though in the tech space), and they have an amazing retirement plan - dollar for dollar up to 8%, and once vested (3 years) the match increases to 12%. I haven't heard of anything even close to that anywhere else. Prior to this, he worked for 3 start ups, all that matched up to 3%.

Topic Expert
Scott MacDonald
Title: President/Owner
Company: AlphaMac Resources, Inc.
(President/Owner, AlphaMac Resources, Inc.) |

Not sure there is an answer that will match all areas of the country. Your best bet is to canvas the companies with which you compete for employees. Then you either match the other companies, or pay a little higher to maybe attract some employees. Although, I don't really believe that the 401k match is a deal breaker if you have the best company to work for in other respects.

Ken Stumder
Title: Finance Director / Controller
Company: Ken Stumder, CPA
(Finance Director / Controller, Ken Stumder, CPA) |

I agree with a lot of the previous postings. In the tech/startup space, a 401k match is less common. The only caution I would have is that if you offer a 401k plan, there are discrimination tests, etc. (it has been a bit since I reviewed the rules) that involve participation rates. If you offer a plan, a match might help ensure you can increase participation.

Also, to a degree, the vesting rules you establish can work towards retention and effectively it is an incremental costs based on tenure. There are administrative and audit costs associated, but you will be incurring those anyway by having a plan.

Everything should be viewed in the context of your local marketplace and ability to attract and retain top talent. 401k matching is one part of a comprehensive comp plan that candidates will weight with salary/options/bonuses. If your company offers solid comp in the other areas, candidates ought to be able to discern what the right mix is for them.

P.S. I disagree that by asking whether a company matches that it signifies a candidate is "a bad fit". People who are not fresh out of college or who have families (or even young foresighted individuals) should be giving some thought to retirement. I think it only natural to ask.

Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

Let's put it in perspective. The financial motivation/rewards In the tech space is different than a usual company. Financial motivation rewards are usually the following: 1) equity (especially if a start-up), 2) a higher than market salary level 3) a more than generous benefits.(ex.just the free food alone may be close or exceed the usual employer matching)

The 401k is low on the totempole of what tech employees want and/or expect from their company.

Toni Van Burkleo
Title: Chief Financial Officer
Company: Network Enhanced Telecom, LLP (dba Netwo..
(Chief Financial Officer, Network Enhanced Telecom, LLP (dba NetworkIP)) |

I work for tech company with 75 employees. We match 50% on the first 3%, with a vesting schedule and our employees seem very satisfied with that match.


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