What is the purpose of an employer-sponsored retirement plan and what is a company match?

• A. To save for retirement with pre-tax or tax-advantaged contributions
• B. It is a loan from the employer
• C. It guarantees retirement income regardless of contributions
• D. It has no tax benefits

Answer: (A)

Employer-sponsored retirement plans exist to help you build retirement savings, with tax-advantaged contributions that can grow either tax-deferred or tax-free. A company match is when the employer adds extra money to your plan based on a portion of what you contribute, effectively boosting your savings at no extra cost beyond your own contributions. This combination leverages both your savings and the employer’s contribution to grow retirement assets. It isn’t a loan to be repaid, it doesn’t promise a guaranteed retirement income regardless of contributions and market performance, and it does provide tax benefits.