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    #1

    Match

    Hi,

    Once the plan is established, the employer will match employee's contributions up to 3% of the employees's annual salary. It will be the employer responsibility to determine the method in which these monies will be invested.

    From the book "So You Want to be an Insurance Agent"

    What does match mean here? Does it have to do with "matching contribution".

    Does the phrase mean the employer take up to 3% of employees's annual salary to save or invest in a certain fund (say a retirement fund)?

    Thanks
    Last edited by Sepmre; 06-Jun-2016 at 15:35.

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    #2

    Re: Match

    Yes. If an employee earns $100,000, the employer will put the same amount into the fund as the employee does, up to $3,000. This sort of arrangement is very common in the US.
    I am not a teacher.

  1. Charlie Bernstein's Avatar
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    #3

    Re: Match

    Exactly.

    In the US, it's a way for businesses to put some of their their charitable donation budgets toward things that will help or please their employees.

    Here in the US, the government does not invest as much into social welfare as most other industrial nations' governments do. So individuals, grant-making funds, religious congregations, and businesses tend to give more than they do in other countries. About 5% of charitable giving here comes from businesses. That 5% includes employee matching programs.

    My opinion is that, to meet human needs, voluntary charitable giving is not as efficient as government support. It's not a good system, but it's our system.
    I'm not a teacher. I speak American English. I've tutored writing at the University of Southern Maine and have done a good deal of copy editing and writing, occasionally for publication.

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    #4

    Re: Match

    I don't think any accountant would record retirement-fund matching as a charitable contribution. It would have to be shown as salary overhead.
    I am not a teacher.

  2. Charlie Bernstein's Avatar
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    #5

    Re: Match

    Quote Originally Posted by GoesStation View Post
    I don't think any accountant would record retirement-fund matching as a charitable contribution. It would have to be shown as salary overhead.
    Omigosh. Good save. I wasn't reading this as a contribution to an IRA or 401(k) retirement account. I read it as a charitable contribution. As nonprofits where I've worked, we got corporate matches all the time.

    So, Sepmre, yes, it might be a retirement contribution. And now that I look at the second sentence again, about the employer deciding how it should be invested, that makes more sense.
    I'm not a teacher. I speak American English. I've tutored writing at the University of Southern Maine and have done a good deal of copy editing and writing, occasionally for publication.

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    #6

    Re: Match

    Does the phrase mean the employer take up to 3% of employees's annual salary to save or invest in a certain fund (say a retirement fund)?
    No, the point is that the employer matches the contribution of the employee. If the employee puts 1% of his salary into the plan, the employer will match an equal amount (1% of the employee's salary). So it is like the employee put aside 2% of his salary.

    The employer will match the contribution up to 3%. Above that, the employee can put more money into the plan, but the employer will only match 3%. If the employee put in 5% of his salary, he would end up with 8% total (his 5 plus the employer's match of 3).

    If the employee puts nothing into the plan, then the employer also puts nothing in.

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