This Could Be the Biggest 401(k) Mistake You Make in 2026

Not everyone has access to a 401(k) plan for retirement savings purposes. But if you do, you may be aware that 401(k)s have certain advantages over individual retirement accounts (IRAs).

With a 401(k) plan, your contributions are taken as payroll deductions, which is a super easy way to stay on track. Plus, 401(k)s have much higher contribution limits than IRAs, allowing you to shield more income from taxes in the course of building a retirement nest egg.

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But perhaps the biggest benefit of being able to save for retirement in a 401(k) is getting an employer match. And giving up that match -- even a portion of it -- could be the biggest mistake you make in your 401(k) this year.

Don't give up that money

There are no universal rules for 401(k) matching. Each employer can decide how it wants to structure its match and whether it wants to impose a vesting schedule for that match.

But the one thing you need to know is that giving up any portion of your 401(k) match is a big mistake. Not only does that mean saying no to free money for your retirement, but it also means forgoing what could be huge gains on that sum.

Let's say your employer will match 100% of your first $3,000 in 401(k) contributions this year. If you contribute only $1,000 to your 401(k), you'll give up $2,000. But in reality, you're giving up way more than $2,000 alone when you factor in lost investment gains.

Let's imagine you're 30 years away from retirement and your 401(k) usually gives you a yearly 8% return, which is a bit below the stock market's average. By giving up a $2,000 match in 2026, you could end up with $20,000 less by the time you actually retire.

How to snag your workplace match in full

If you don't like the idea of giving up free money in your 401(k), first find out what your employer match entails so you know what you're dealing with. If that match seems unattainable initially, take a close look at your expenses to see whether it's possible to reduce your spending to free up more money for retirement savings.

If that doesn't work, consider a side job. You may find that working a few extra hours a week spells the difference between claiming your full workplace match and not.

Many people don't have access to a 401(k) plan, or have workplace plans without a match. So, if you're lucky enough to have the option to snag free money for your retirement, you should do your best to capitalize on it and not give up so much as a penny from your employer.

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