The modern 401k was invented by accident in 1978. Lawmakers inserted the provision into the IRS tax code in an effort to quell rising anxieties about the tax status of profit-sharing plans. This was a minor item that would affect just a handful of companies, according to Morningstar News. Originally, 401ks were expected to have a negligible impact on tax revenue.
By 2013, that “negligible” amount was $57 billion. That’s enough money to run the Army Corps of Engineers; the Departments of the Treasury, Interior and Labor; the National Science Foundation; and the Social Security Administration and Small Business Administration — at the same time.
Today, most employer retirement plans come in the form of 401ks, as companies with pensions are becoming harder and harder to come by. Employees at businesses that don’t offer 401ks will have to open an IRA or Roth IRA on their own. When comparing different types of retirement plans, keep in mind that the amount your employer matches will have a big impact on your life after your earning years have passed. Because of compound interest, a variation of just a few percentage points could mean the difference of hundreds of thousands of dollars over the course of a career.
Tech Company Offerings
Modern tech giants like Google are lauded for their employee-centric work cultures, creative incentives and all-around awesome benefits that include perks like cooking classes, guitar lessons and great parental leave policies. Many also shine when it comes to offering generous investment accounts for retirement planning.
Here’s how the retirement accounts from the biggest tech companies stack up:
- Google: Known for offering what might be the best perks in the world, Google’s 401k ranked No. 8 on Bloomberg’s list of top 50 401ks. No tech or communications company ranked higher. The company matches 100 percent of employee contributions up to $3,000.
- Apple: This retirement plan is also in the upper echelon with a 6-percent match of eligible employee pay. Its 401k consists of 14 funds.
- Oracle: Oracle matches 50 percent of up to 6 percent of employees’ savings. In 2016, however, the company was named in a class-action suit alleging excessive 401k fees.
- Facebook: Facebook offered no matching contributions at all as late as 2014. Today, however, the social media giant ranks No. 38 on Bloomberg’s list of the 50 best plans. The company matches 50 cents on the dollar up to 7 percent.
- Amazon: This 401k falls far short compared with most of its tech giant peers, according to Bloomberg. Bloomberg ranked Amazon dead last in its list of the Standard and Poor’s 500 index’s 50 top companies. A new worker earning $80,000 would be eligible for a maximum company match of just $1,600.
Learn: 12 Secret Moves to Double Your 401k
10 Best Large-Company 401k Plans
Some of the best 401k plans are included in the retirement packages offered by the biggest companies in the world. This year’s list of nontechnical giants features some familiar names as well as some new companies. Among the companies that didn’t make the cut this year — after appearing in last year’s top 10 — are Halliburton, Monsanto, DuPont, Aetna and Time Warner.
- ConocoPhillips: This is the best big company in the world to retire from, according to Bloomberg. The ConocoPhillips retirement plan matches 900 percent of 1 percent contributions.
- Boeing: Boeing ranks second with a 75 percent match of up to 8 percent.
- Amgen: This health care giant’s retirement plan matches 100 percent of employee contributions of up to 5 percent.
- Citigroup: Citigroup matches 100 percent of up to 6 percent of employee contributions.
- McDonald’s: The fast-food giant provides a super-sized benefits program — it contributes $3 for every dollar an employee puts into a 401k up to 1 percent. After that, it matches 100 percent up to 4 percent.
- MasterCard: MasterCard contributes a full 125 percent up to 6 percent of what its employees put into their 401ks.
- Philip Morris International: Philip Morris matches its employees’ contributions dollar for dollar up to 5 percent.
- Altria: This tobacco maker comes in right behind Google with a 401k plan that matches 100 percent of employee contributions up to 3 percent.
- Visa: Visa contributes 200 percent of what its employees save for up to 3 percent of their pay. That’s a complicated way of saying it will match up to 6 percent.
- 3M: 3M also matches up to 6 percent of employee contributions.
Find Out: 5 Major Employee Perks That Help You Save Money
Good Plans From Lesser-Known Companies
The best retirement plans aren’t always hosted by the most well-known companies. Here are some of the best plans from businesses that might not be household names.
- Navy Federal Credit Union: This credit union matches 100 percent of up to 7 percent of pre-tax savings. It also provides employees with retirement workshops and seminars.
- Perkins Coie: Perkins Coie matches 50 percent of the first 6 percent that employees save.
- JM Family Enterprises: JM Family Enterprises offers a 3-percent match, supplemental pension plan and profit-sharing plan that fully vests workers after six years of service.
- TMG Health: TMG Health offers a 100 percent match of the first 1 percent saved, then a 50-percent match for the next 5 percent. Employees become 25-percent vested after one year and 100-percent vested after two years.
- Gilead: Gilead matches 100 percent of employee contributions up to $10,000 a year. Not only are company contributions immediately vested, but employees can buy company stock at a discount.
See: How to Master Your 401k in Your 60s
Check If Your Company Stacks Up
Companies with pension plans used to be the key to aging comfortably. But with the arrival of the 401k in 1978, workers took more control over their retirement savings — and the best candidates began expecting more from their employers. Today, millions of Americans depend on their 401ks for security and independence in life after their earning years, and companies that lure the top talent are often the companies with the best retirement plans.