Business and Personal Finance Dictionary

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• MATCHING FUNDS
  
  When your employer contributes a percentage of the amount you put into an employer-sponsored retirement savings plan, the amount of the employer's contribution is described as matching funds. The advantage of matching funds is that the added amounts increase the base on which your earnings accumulate tax-deferred, helping to build your account more quickly. Employers aren't required to provide matching funds, and they can set their own contribution rules. For example, some employers match 50% of your contribution, up to a cap of 6% of your salary, while others may offer larger or smaller matches. Unlike the money you contribute, which is yours from the start, you must be vested before you can withdraw or roll over the matching funds your employer contributes to your account.
  
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