Should I contribute to my 401(k) even if there's no match?

A majority of 401(k) plans offer an employer match. An employer contribution is a retirement plan feature in which an employer contributes to an employee's 401(k) or other retirement savings plan, typically based on the amount the employee puts into their account.

According to the 2024 report, 96% of plans administered by Vanguard offer some type of employer contribution. So, what happens if your plan doesn’t offer an employer contribution?

When faced with the prospect of contributing to a plan without a match, you may think that it’s not worth it. But there’s more to it. Let’s review key criteria to decide whether or not it’s worth contributing to a 401(k) without employer contributions.

Criteria #1: Level of income

Let’s take a look at two scenarios: high income versus low income.

The high-income case

Single tax filers with high incomes may be better off contributing to an employer-sponsored 401(k), even without a match, for three reasons.

1. Once you reach certain income thresholds, you’ll no longer be eligible to enroll in alternative retirement plans, such as a Roth IRA. When you know that your income will continue to be high or you still have plenty of room for income growth, then enrolling in a 401(k), even without a match, could still make sense to save for retirement.

2. Second, high earners may find the contribution limits to a traditional IRA or Roth IRA to be too low. In 2025, you can contribute up to $7,000 ($8,000 if age 50 or over) per year to a traditional IRA or Roth IRA. For a 401(k), you can contribute up to $23,500 as your base contribution. The catch-up contribution structure varies by age: those 50-59 or 64+ can add $7,500 (bringing their total to $31,000), while those aged 60-63 can add $11,250 (bringing their total to $34,750).

In the specific case of a Roth IRA, you may still qualify for enrollment but not be able to contribute as much as the regular limit. Your MAGI determines your contribution limit to a Roth IRA.

*To figure out your reduced contribution limit, refer to the worksheet on Publication 590-A, Contributions to IRAs.

3. Individuals in certain income brackets can take a diminished deduction from their contributions to a traditional IRA. Furthermore, once your MAGI hits a certain limit, your IRA contributions no longer reduce your taxable income.

High-earning individuals close to retirement age may be better served by a 401(k), which allows them to contribute more than an IRA. Therefore, high earners could benefit from contributing to a 401(k) without an employer match because they would be able to take a higher deduction.

The lower-income case

Workers with lower incomes—or those just starting their careers—could benefit from contributing to a traditional or Roth IRA, instead of a 401(k) account with no match. For example, if your annual salary is $32,000 and you save 6% of that for retirement ($1,920), you wouldn't surpass the $7,000 IRA contribution limit.

In this example, there’s a lower incentive to stick with the employer-sponsored 401(k) because you don’t benefit from having a higher contribution limit. Sticking with an IRA would allow you to keep track of a single plan until you decide to contribute more than IRA contribution limits. Managing multiple retirement accounts can be complex. It's important to keep track of fees and investment performance across all your accounts to ensure they align with your financial goals.

Even when contributing to an IRA instead of an employer-sponsored 401(k), qualifying taxpayers can still take advantage of the retirement savings contributions credit, also known as the saver’s credit. For example, a couple married filing jointly with an adjusted gross income between $39,501 and $43,000 qualify for a tax credit equal to 20% of their IRA contribution.

For low-income earners, young workers, and frequent job hoppers, it's worth comparing the benefits of a non-matching 401(k) against other options like an IRA to see which best fits their financial situation. To help, review our comparison of 401(k) vs. IRA.

Criteria #2: Fees

According to Morningstar, a fund's annual expense ratio is a key indicator of its potential for future success, as lower-cost funds have been statistically more likely to deliver stronger net returns over time.

Even without an employer match, contributing to your 401(k) can be a powerful step towards retirement, primarily due to the tax advantages and potential for long-term growth. While evaluating fees is crucial, the ability to contribute pre-tax dollars (or after-tax Roth contributions) and have your investments grow tax-deferred or tax-free can still outweigh the benefits of other vehicles like an IRA, even after considering fees. 

Therefore, understanding plan participant 401(k) fees and investment options in comparison to other plans is essential to leverage its unique benefits for your retirement savings.

Criteria #3: Investment options

A self-managed IRA certainly has the potential to provide you with varied investment choices, offering broad flexibility. However, your employer-sponsored 401(k) may have at least one target-date fund, which can be a compelling reason to contribute even without an employer match. 

Target-date funds may be a good option for many 401(k) participants—especially those without a match—as they offer a professionally managed, diversified portfolio* that automatically adjusts risk over time. This makes them suitable for individuals new to investing, those who lack the time or expertise for active management, or anyone with a longer time horizon until retirement, providing a simple, "set-it-and-forget-it" approach to building a nest egg.

The bottom line: Save, if you can!

Do your homework and shop around for all of your available options for saving for retirement. When evaluating whether or not to contribute to your employer-sponsored 401(k), use your level of income, target annual expense ratio, and desired list of investment funds. The sooner that you start saving for retirement, the closer you’ll be to your nest egg’s target.

If you want to set up or switch to a 401(k) that's great for employees and employers, let your company know about Human Interest.

*Diversification does not ensure a profit or protect against loss.