Your 401(k) Company Match Could Become Even More Powerful To Build Wealth – Here’s Why

Retirement accounts are a key component for Americans to build wealth for their post working years. High net worth Americans report more than half their wealth is in accounts like 401(k)s and IRAs. And this trend is bringing more workers into the millionaire category, with nearly 500,000 “401(k) millionaires” in the U.S., according to Fidelity. Part of what makes 401(k) company match retirement plans so beneficial are the added incentives offered by employers.

This is when an employer will also contribute to your retirement. For example, an employer may offer a 3% match when you contribute 3%. This full match is essentially free money. However, many workers are not contributing enough to their retirement plan to earn the dollar for dollar match. This is leaving money on the table, and it’s a powerful part of building long-term wealth, and a recent IRS ruling could make it even better.

Here’s what you need to know about your employer match, and how you can use your 401(k) to build wealth, even if you’re in debt.

401(k) Company Match Changes Could Be On The Way

A recent 401(k) match ruling from the IRS sheds light on some potential changes in the future. For one particular company (who remains anonymous), employees can use their employer match contributions for more than retirement. They can now use what their employer contributes towards a Health Savings Account (HSA) or pay off student loans.

This can be helpful for those who want to save for future healthcare-related expenses or pay down their mounting student loans. This could just be the start, as experts say the IRS is running an experiment for further policy changes in the future. However, these options for other uses of a 401(k) match may not be the best use case compared to simply adding to your retirement savings.

Here’s an example of an average worker’s salary and debt at 35 years old, with 30 working years remaining:

• Salary: $60,000 (near the median American salary)
• Average 401(k) match and contribution: 6% of salary and employer matches 3%
• Median balance is roughly $36,000
• Average student debt: $38,000 at 6% over 10 years (monthly payment is $422/month)

This example shows that your employer contribution could be far more powerful in growing wealth, rather than directing it towards short- or medium-term debt.

It’s a positive sign from the IRS that it’s giving employees flexibility in how they use their employer benefits. However, it could be a better outcome if you focus on investing first for your post-working years.

How You Can Save For Retirement and Pay Down Debt

I had over $80,000 in student debt at one point. As overwhelming as it was, I never neglected saving for retirement and taking advantage of employer match formulas. Roughly seven years after graduating from college, I paid off my student loans in full, and contributed to my 401(k) and IRA along the way. Yes, I could have had my debt paid off quicker if I didn’t invest at all and solely focused on my debt. But now that I’ve been student loan debt free, I can now put even more money towards my retirement accounts.

For most, paying off debt and saving for retirement can be a struggle. If you’re trying to tackle both, here are a few tips to consider:

Lower the interest rate on your existing debt using a personal loan

If you have revolving credit card debt or other high-interest debt, consolidating it into a personal loan can help you pay it down more effectively. This approach, known as debt consolidation, simplifies your debt by combining multiple bills into one manageable loan.

Streamline Your Debt Payoff Journey with Debt Consolidation

Reputable online platforms like Credible, LendingClub, and Upstart offer a variety of loan options designed for a wide range of credit profiles.

For example, Upstart uses artificial intelligence to evaluate applicants, taking into account more than just their FICO score. It considers factors such as education level, employment history, and overall financial stability, making it a more inclusive option for individuals with diverse credit backgrounds. On the other hand, Credible’s technology streamlines the loan comparison process, allowing users to easily compare top lenders—including Upstart and LendingClub—and get prequalified faster.

Use student loan refinancing to your advantage

If your student loans are also at a high interest rate, or you have multiple loans you want to combine into one, consider using student loan refinancing to your advantage. I used student loan refinancing 6 times to regularly bring the interest rate down, and it saved me thousands of dollars.

Reputable student loan refinancing companies, including Mefa and College Ave, offer excellent low APR student loan refinancing options for students to consider.

Check with your employer about your 401(k) company match plan

If you’re unsure of the benefits your employer offers, contact your HR representative. They will be able to tell you if your employer offers one, and how much they will match. Do your absolute best to contribute enough to get the employer match.

What’s more, employees can contribute a significant amount of money each year into a 401(k) company match retirement account. Here are the 401(k) contribution limits for 2025:

Bottom Line

Being in debt can be stressful, but reaching your post-working years without necessary savings is even worse. A recent AARP study says 1 in 4 Americans over the age of 50 expect to never retire. The same number say they have no retirement savings.

Be sure to use the employer-sponsored retirement plan your employer offers to its fullest, and capture the 401(k) company match at a minimum. This can be the first step towards saving for a great post-working life.