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An employer match is one of the most valuable features of a 401(k), but not all plans offer it. Even without an employer matching your contributions, a 401(k) can still be useful for retirement savings. The tax-deferred growth and potential for disciplined, automatic contributions make it a worthwhile option to consider. If your 401(k) plan doesn’t match your contributions, deciding whether to contribute involves weighing several factors, including alternative investment opportunities and the broader role your 401(k) might play in your overall retirement strategy.
Talk your financial objectives over with a financial advisor to develop a retirement savings strategy.
How Does an Employer 401(k) Match Work?
An employer 401(k) match is a financial contribution made by an employer to their employee’s retirement account. It is typically based on the employee’s own contributions and serves as a powerful incentive to save because it effectively means free money if you participate.
An employee match is often structured as a percentage of the employee’s salary but with a cap. For example, an employer might match 50% of the first 6% of the employee’s salary that the employee contributes. This means if you contribute 6% of your salary, the employer adds an amount equal to 3% of your salary to your 401(k). However, if you contribute more than 6 percent, there will be no matching contribution for that extra three percent..
In addition to matching only a portion of the employee contributions, these programs often carry limitations. For example, most employees don’t immediately have full ownership of employer matching contributions.
Your vesting schedule determines when you gain full ownership of matched funds. Vesting periods can range from immediate to a period of several years. Therefore, understanding the match formula, along with its vesting requirements, is key to maximizing the value of your employer-sponsored 401(k).
Another benefit of employer matching is that employer contributions don’t count against the cap on 401(k) contributions by the employee. For 2025, this limit is $23,500, with an increase in 2026.
2025-2026 401(k) Employee Contribution Limit
| Year | Employee Contribution Limit | Total Contribution Limit |
|---|---|---|
| 2025 | $23,500 | $70,000 |
| 2026 | $24,500 | $72,000 |
These plans also offer other advantages, such as tax benefits and long-term investment growth. These advantages can still make it worthwhile to contribute without additional employer contributions.
Reasons to Contribute to a 401(k) That Doesn’t Match
Even with no employer match, a 401(k) can still be a valuable tool for retirement savings, offering tax advantages, convenience and opportunities for disciplined investing. Regardless of whether your employer offers matching contributions, there are several reasons why contributing to a 401(k) can be beneficial.
- Tax-deferred growth. Contributions are made pre-tax, lowering your taxable income, and investment earnings grow tax-free until withdrawal.
- Automatic payroll deductions. Consistent, automated contributions help establish disciplined saving habits with minimal effort.
- Diverse investment options. 401(k) plans often provide access to professionally managed funds, such as low-cost index funds and target-date funds, simplifying investment choices.
- Tax planning benefits. For higher earners, contributing can help reduce taxable income, helping you fall into a lower tax bracket.
- Long-term savings strategy. Even without matching, the tax advantages and compounding growth of a 401(k) can significantly boost your retirement savings over time.
- Higher contribution limits. Even without a company match, a 401(k) offers higher contribution limits when compared with individual retirement accounts (IRAs). The IRS lets you contribute up to $23,500 to a 401(k) in 2025 (or $25,000 in 2026), plus another $7,500 for those 50 or older ($8,600 in 2026).
- Super catch-up contributions. Savers between ages 60 and 63 can save an extra $11,250 in a 401(k) – for a total of $34,750 – thanks to the super catch-up provision of the SECURE Act 2.0. This limit applies for both 2025 and 2026.
Alternatives to Your Company 401(k)
If your employer doesn’t offer a 401(k) match, exploring alternative ways to save for retirement can help you maximize your investment potential.
2025-2026 Contribution Limits
| 2025 Contribution Limit | 2026 Contribution Limit | |
|---|---|---|
| 401(k) | Employee: $23,500 Total: $70,000 | Employee: $24,500 Total: $72,000 |
| IRA | Younger than 50: $7,000 50 or older: $8,000 | Younger than 50: $7,500 50 or older: $8,600 |
| HSA | Individual: $4,300 Family: $8,550 | Individual: $4,400 Family: $8,750 |
| Taxable Investment Accounts | N/A | N/A |
| SEP IRA | 25% of income, up to $70,000 | 25% of income, up to $72,000 |
| Roth IRA | Younger than 50: $7,000 50 or older: $8,000 Maximum Income Single filers: $150,000 Joint filers: $236,000 | Younger than 50: $7,500 50 or older: $8,600 Maximum Income Single filers: $153,000 Joint filers: $242,000 |
Individual retirement accounts (IRAs)
Traditional and Roth IRAs often come with more investment choices than a 401(k) and provide tax advantages to boot. A Roth IRA, for example, allows tax-free withdrawals in retirement, making it a compelling option if you expect to be in a higher tax bracket later.
For 2025, you can contribute up to $7,000 in 2025 or $7,500 in 2026 to an IRA if you are younger than 50, and up to $8,000 in 2025 or $8,600 in 2026 if you are 50 or older.
2025-2026 IRA Contribution Limits
| Year | Contribution Limit |
|---|---|
| 2025 | Younger than 50: $7,000 50 or older: $8,000 |
| 2026 | Younger than 50: $7,500 50 or older: $8,600 |
Health savings accounts (HSAs)
If you have a high-deductible health plan, a health savings account (HSA) offers triple tax benefits: tax-deductible contributions, tax-free growth and tax-free withdrawals for qualified medical expenses. Unused funds can even be used for retirement after age 65.
For 2025, you can contribute up to $4,300 to an HSA and $8,550 as a family. In 2026, limits will increase to $4,400 for individuals and $8,750 for families.
2025-2026 HSA Contribution Limits
| Year | Contribution Limit |
|---|---|
| 2025 | Individual: $4,300 Family: $8,550 |
| 2026 | Individual: $4,400 Family: $8,750 |
Taxable investment accounts
Taxable investment accounts may not immediately come to mind because they lack tax advantages. However, they do have their benefits, including no contribution limits.
These accounts offer complete flexibility in your investment choices and withdrawal timing, making them a useful supplement to retirement savings.
Solo 401(k) or SEP IRA
If you’re self-employed or earn freelance income, a Solo 401(k) or Simplified Employee Pension (SEP) IRA can be an effective way to save for retirement. Both allow much higher contribution limits than traditional IRAs.
The 2025 contribution limit for a SEP IRA is up to 25% of your income, with a $70,000 maximum in 2025 and $72,000 limit in 2026 (or more with catch-up contributions in a Solo 401(k) for ages 50 or older). These plans offer tax-deferred growth while allowing you to deduct contributions as a business expense.
2025-2026 SEP IRA Contribution Limit
| Year | Contribution Limit |
|---|---|
| 2025 | 25% of income, up to $70,000 |
| 2026 | 25% of income, up to $72,000 |
A Solo 401(k) can also include a Roth component, giving you flexibility in how your retirement income is taxed later.
Roth IRA Strategy for Non-Matching 401(k) Savers
If your 401(k) plan does not include a company match, a Roth IRA can be a beneficial tool for building retirement savings.
Money placed in a Roth IRA is contributed after taxes are paid, and withdrawals that meet IRS rules are not taxed in retirement. This can help create flexibility when managing income taxes later in life.
Combining a 401(k) and Roth IRA can spread your tax exposure over time. The 401(k) helps lower your taxable income now, while the Roth IRA provides access to funds that are not taxed when you withdraw them in retirement.
However, contribution and income limits still apply for 2025, with an increase for 2026.
2025-2026 Roth IRA Contribution Limits
| Year | Contribution Limit by Age | Maximum Income |
|---|---|---|
| 2025 | Younger than 50: $7,000 50 or older: $8,000 | Single filers: $150,000 Joint filers: $236,000 |
| 2026 | Younger than 50: $7,500 50 or older: $8,600 | Single filers: $153,000 Joint filers: $242,000 |
If your earnings are above the income threshold, you may still add funds through a backdoor Roth. This involves placing money into a traditional IRA and then rolling it over to a Roth IRA. You will pay taxes on the amount moved, but once you transfer funds to the Roth, any growth and qualified withdrawals will be free from further taxation.
Are Fewer Employers Offering a 401(k) Match?
While some companies may choose to temporarily curtail or eliminate their 401(k) matching contributions in response to economic uncertainty or lagging performance, the overall data does not seem to support a significant trend toward eliminating 401(k) matches.
Nearly nine out of 10 large 401(k) plans (those with 100 or more participants) offered employer contributions in 2021, according to a BrightScope/ICI report. This figure hasn’t changed much in recent years. A 2025 Vanguard report found that 96% of plans offered employer contributions, with 99% of employees taking part.
This consistency suggests that the “401(k) no matching trend” is not widespread among large employers. In fact, a large majority of participants in these plans continue to benefit from employer contributions, indicating that matching remains a common feature in 401(k) offerings.
Bottom Line
Choosing whether to contribute to a 401(k) without a matching benefit depends on your individual financial goals and circumstances. However, the plan’s tax advantages and simplicity often make it a compelling option. Alternatives like IRAs, HSAs and taxable investment accounts can complement or replace a 401(k) in certain scenarios, offering flexibility and unique benefits.
Retirement Planning Tips
- A financial advisor can help you mitigate risk for your portfolio. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- If you want to know how much your 401(k) account balance could grow over time, SmartAsset’s 401(k) calculator can help you get an estimate.
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