Do you ever grumble about your salary or wish you could get a raise? If your employer has a matching 401(k) retirement program (or a 403(b) if you work for a non-profit) and you’re not taking advantage of it, you are turning down free money.

With such plans, every time you put money in your 401(k), your employer also kicks in some cash, up to a certain amount. This is above and beyond your salary and contributes to your retirement, arguably helping you wind up someday on a beach in Cabo with a caipirinha in your hand and not a care in the world.

Does your company have a matching 401(k) plan?
When the economy tanked, so did many employers’ 401(k) contributions. Good news: Many employers who eliminated or cut back on matching contributions are now restoring them. Your first step is to give HR a call to find out if your company has a matching 401(k) plan.

How does it work?
Different companies have different types of plans. Speaking in general terms, the most common employer 401(k) match is 50 cents for every dollar you contribute, up to 6 percent of your gross salary. For example, let’s say you make $50,000 a year and you kick in at least 6 percent of your salary to the plan. Under this plan, your employer would put in $1,500. Sweet! Some employers contribute $1 for every dollar you put in, up to 3 percent of your salary. The types of plans and contributions vary from one place to another, so the best approach is to talk with HR and find out what your specific company is doing.

Would you turn down free money?
You will save all the money you yourself put in the account, plus however much your employer puts in. The key here, however, is that it’s a matching deal, so you have to put money in yourself. No contribution from you means no contribution from the employer.

Keeping it close to the vest
When you talk to HR about your 401(k) program, be sure to ask about vesting. This is because while the money you put in your 401(k) is always yours to keep, the money your employer puts in may depend on a vesting schedule. When you vest in your employer’s matching contributions, you obtain the legal right to keep the contributions. This means that if you leave before you are vested, you lose the matching funds from the employer. Find out your employer’s vesting schedule. When you are “fully vested”, this means you have accrued your 401(k) retirement savings. It’s something to keep in mind if, say, you are planning to leave the company, and a few days or weeks could make the difference between keeping or losing the employer’s contribution. Some companies use cliff vesting where you become vested all at once after a certain period of time. Others use a graded vesting schedule, in which you vest in your employer’s contributions after certain anniversaries with the company. Thanks to the Pension Protection Act of 2006, it can’t be less than:

• After one year of service: 0% vested
• After two years of service: 20% vested
• After three years of service: 40% vested
• After four years of service: 60% vested
• After five years of service: 80% vested
• After six or more years of service: 100% vested

Explore ways to save
A common excuse for not contributing is that it is hard to set the extra money aside. Creating a realistic budget and seeing exactly how much money is coming in and going out can be an eye-opening experience. Sometimes just the process of creating a budget can help illuminate ways to compensate for a shortfall and you may even find that you have more money available than you previously thought. After taking a look at your budget, simply setting up automatic contributions that are deducted from your paycheck may make it easier to set the amount aside. What you don’t see you don’t spend, which may help encourage you to live within your means with the money you do end up taking home.

Just do it
Yet another plus to contributing is that it comes out of your paycheck pre-tax, so when you contribute you are essentially lowering your taxable income. That means more money in the bank and less going to the IRS.

Once you’ve been thoroughly briefed on your company’s matching retirement policies, the ball is in your court. Don’t hesitate – take advantage of that free money!