Define "employer match" in the context of a 401(k) plan.

In the context of a 401(k) plan, "employer match" refers specifically to the additional funds that an employer contributes to an employee's retirement account based on the employee's own contributions. This matching contribution typically encourages employees to save for retirement, as it effectively increases the amount being saved. For example, if an employee contributes a certain percentage of their salary to their 401(k), the employer might match that contribution up to a predetermined limit, such as 50% of the employee’s contribution or matching dollar-for-dollar up to a certain amount.

This practice not only boosts the total retirement savings for employees but also serves to attract and retain talent, since employees are more likely to stay with a company that invests in their long-term financial wellbeing. Matching contributions are often structured to incentivize employees to contribute at least enough to benefit from the full match. This feature makes participating in a 401(k) plan financially advantageous, as it is essentially “free money” that enhances the employee's future retirement benefits.