Who would turn down free money? Apparently, plenty of Americans are doing exactly that: 20 percent of them underfund matching 401(k) plans, according to the Motley Fool. This significant mistake effectively dismisses free money.

Approximately three-quarters of companies with 401(k) plans offer a matching program where the employer contributes an equal amount to the employee’s contribution up to a certain limit.

The employer’s matching contribution is extra money that you receive simply by contributing to your retirement account – in essence, free money.

Bypassing Free Money

If you don’t contribute to the matching limit, you are bypassing the opportunity to add this free money to your tax-deferred retirement funds.
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