HOW IT WORKS:

1. Employee Contribution: You can contribute a percentage of your salary to your 401(k) plan. Let's say you decide to contribute 6% of your salary.

2. Employer Match: Your employer will contribute 80% of what you contribute, but only up to 6% of your salary. So if you contribute 6%, your employer will match it by contributing an additional 4.8% (80% of 6%).

• If you contribute less than 6% (say 4%), your employer would contribute 80% of that 4%, which would be 3.2%.

• If you contribute more than 6% (say 8%), the employer will still only match 80% of 6% of your salary. They do not match beyond that 6% threshold.
   

EXAMPLE:

• Salary: $50,000

• Your Contribution: 6% = $3,000

• Employer Match: 80% of 6% = $2,400

So, in this example, $5,400 ($3,000 from you + $2,400 from your employer) will be added to your 401(k) for the year.

This employer match is a great benefit because it's essentially "free money" added to your retirement savings, incentivizing employees to save as much as they can up to that 6% limit.

VESTING SCHEDULE:

A 6-year vesting schedule refers to the timeframe in which an employee gains ownership of employer-contributed funds (like the 401(k) match). Under this schedule, the employee gradually "vests" in their employer's contributions over a 6-year period.

Here’s how it works:

• Year 1: 0% vested

• Year 2: 20% vested

• Year 3: 40% vested

• Year 4: 60% vested

• Year 5: 80% vested

• Year 6: 100% vested

By the end of the sixth year, you are fully vested, meaning all employer contributions are now yours, even if you leave the company. If you leave before full vesting, you only take the vested portion with you. Your own contributions, however, are always 100% yours from day one.