The Value of your 401k: Why is Schellman's 10% Match a Big Deal?
We all may be part of the active workforce now, diligently doing our jobs to pay the bills and live our lives. But as we do all that, I’d bet there’s not one person working that doesn’t have their eye on the “finish line.”
Retirement—the time when everybody wants to sit back on the beach with a cocktail or travel the world or just relax. Still, you need money to survive even then, and where’s that going to come from if you’re not working?
That’s what your 401(k) is for, and if you know what I’m talking about, you’re probably contributing to that with every paycheck. A little each time will add up in the long run, and what’s even more helpful is if you have the added bonus of an employer match.
To have your employer also contribute to your personal retirement fund is a benefit in itself, but Schellman takes that bar and raises it considerably. Team members at Schellman all are allowed a 10% match to their 401(k), and in this article, we’re going to get into why that high number is so significant.
What’s a 401(k)?
For any recent graduates or those otherwise new to the workforce, let’s first quickly define a 401(k), generally speaking:
A 401(k) is a qualified retirement plan that allows employees to contribute a portion of their wages towards retirement. Each employee agrees to have a percentage of their income paid directly into an investment account and choose from among several investment options.
There are two kinds of 401(k) accounts:
- A traditional 401(k) is when your contributions are made before taxes, reducing your taxable income, though withdrawals are taxed when disbursed.
- A Roth 401(k) is when the employee contributions are made after taxes, which includes no tax deduction, but withdrawals are tax-free.
There are limits to contributions, however; laws in place ensure higher earners—who can more ably afford to set aside more of their income than the average worker—don’t benefit more than those lower on the corporate totem pole.
In 2022, your personal contributions are capped at $20,500. (With that being said, if you’re over the age of 50 and reading this, know that you’re eligible for an additional contribution of $6,500—making your cap for the year $27,000.)
Understanding Employer Matches to Your 401(k)
As we mentioned earlier, an employer may match part or all of your contributions, based on what you elect to do.
It’s standard practice for employers to use various formulas in calculating that match—depending on where you work, you could get a partial match or, if you’re luckier, you might get a dollar-for-dollar match:
- A partial 401(k) match is when an employer matches their employees' contributions up to a certain percentage. For example, an employer can provide a 50% partial match on your contribution, up to a certain maximum.
- A dollar-for-dollar match is when an employer matches the same amount of money that you contribute, up to a certain percentage. For example, if an employee contributes $100 per paycheck, the employer will set aside the same amount of money in your account for you.
Moreover, while any contributions you make are always yours, your employer contributions typically are on a vesting schedule. That is, you might be required to work at that company for a certain amount of time before the match is 100% yours. Often, vesting happens gradually — i.e., 20% of the match is vested after one year, 40% after two years, and so on.
All the complications and specifics aside, if an organization provides 401(k) matching as a benefit, that means they’re going to provide you with what’s basically free money. Wherever you work, you could be leaving cold hard cash on the table by not taking full advantage of your employer’s retirement matching—think of all the places you could see on their dime, in the future!
Schellman’s 401(k) Benefit
Of course, some organizations are more generous than others—some may not offer a match at all, though most places these days do. At Schellman though, there’s an active prioritization of individual team members and their lives even outside of work that’s demonstrated through a great benefits package.
The 401(k) match is part of that, and Schellman contributes up to a whopping 10% for all personnel—that’s a dollar-for-dollar match. There aren’t any complex accounting formulas, and you don’t need a calculator or to read any complex documents. Not everyone takes advantage of the full percentage, but it’s still available to anyone in the firm. If you put in 10% of your paycheck, Schellman is going to match that.
Among all the other benefits, this one’s particularly important to me, because a competitive company match is not only going to let me reach my retirement goals sooner, but I’ll also be able to retire comfortably. Balancing thinking about that future with my current workload is a lot, but it helps a bit that Schellman is doing what it can to ease some of my worry about the future.
My coworkers and I won’t work forever—we probably won’t even work here forever—the firm understands that, and they’ve committed to solidly contributing to our futures outside of our contributions to Schellman.
So, if you’re an auditor shopping around for a firm, research might reveal that this 401(k) plan may very well be the best retirement plan within the industry. Schellman sees that 10% match as a way to enhance retirement contributions, and I’m glad to be able to take advantage and plan for my future with their help.
It isn’t really a topic that comes up often in my casual conversations—401(k) accounts. But when it does, and others hear about Schellman’s match program, I always see at least a little bit of an eyebrow raise.
And despite my planning for it now, retirement’s a long way off for me—it might be the same for you. A match program might be a nice thing you’d like to get from your job, but it’s not the only thing Schellman offers to those on our team.
If you’re interested in learning about other benefits—like our annual corporate retreat—and how else the firm supports our team, check out our other blogs and stories:
About Hiren Patel
Hiren Patel is a Senior Associate with Schellman based in Atlanta, Georgia. Prior to joining Schellman in 2021, Hiren Patel worked as a Senior Associate, for a Big 4 specializing in Internal Audit and IT Audit also led and supported various other projects, including SOC 1, SOC 2, SOX Co-Souring, and Enterprise Risk Management. Hiren Patel has over 4 years of experience comprised of serving clients in various industries, including Financial Services, Manufacturing, and Health Care is now focused primarily on Service Organization Reports for organizations across various industries.