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Understanding the AT&T 401(k) Match: A Guide for Employees

December 14th, 2023 | 3 min. read

By Ryan Theisen, CFP®

matching 401k savings

Retirement planning is a critical aspect of financial wellness, and for AT&T employees, understanding the company’s 401(k) match policy is a key part of this journey.

But, how does AT&T’s 401(k) match work? Do you need to do anything to take advantage of it?

Advance Capital Management has been serving AT&T employees and retirees since 1986. So, we have a deep understanding of AT&T’s benefits and how they can make a difference in your financial future. Explore our AT&T Retirement University to learn more.

As an AT&T-experienced financial adviser at Advance Capital Management, I hope to provide some clarity to your questions. In this article, I cover how AT&T employees, both ‘bargained for’ and ‘non-bargained for’, can optimize their retirement savings by leveraging the company’s 401(k) match.

AT&T 401(k) match for ‘bargained-for’ employees

For ‘bargained for’ employees, there is no exact dollar amount or percentage that you can contribute for your basic contribution, as the basic contribution limit is determined by your hourly wages. So, it can vary.

Regardless, AT&T will match up to 80% of your basic contribution.

For example, if you contribute $65 to max out your basic contribution, AT&T will match 80% and contribute $52 to your 401(k).

AT&T 401(k) match for ‘non-bargained for’ employees

For ‘non-bargained for’ for employees, you can max out your basic contribution by contributing 6% of your salary into your 401(k). AT&T will match 80% of that amount.

Why you should max out your basic AT&T 401(k) contribution

The reason is simple: you should try to max out your basic contribution because this is essentially free money for your retirement that you don't want to miss out on.

As with your own contribution, AT&T’s matching dollars can compound over time.

Saving beyond your basic contribution will definitely help you grow your retirement savings even more, and you can do so by making a supplemental contribution. But again, at the very least try to max out your basic contribution.

How the AT&T 401(k) match is invested

A unique aspect of the AT&T 401(k) plan is how the company’s match is invested. AT&T’s matching funds are automatically invested into the AT&T shares fund. Even if you have different investment elections for your contributions, the company match is going to go directly into the AT&T shares fund.

This scenario poses a risk of lack of diversification, as these funds are entirely invested in AT&T stock.

That’s why we recommend you consider periodically moving funds from the AT&T shares fund into more diversified investment options offered within the 401(k) plan, such as the large-cap US stock index or the large-cap stock fund.

This strategy not only diversifies the investment but also capitalizes on the potential higher returns of these diversified funds.

By being heavily invested in the AT&T shares fund, your retirement savings are overly dependent on the performance of a single company. Diversifying into different funds mitigates this risk and exposes your 401(k) to a broader market performance.

As shown in the chart below, over the past decade, the S&P 500 index has consistently outperformed AT&T stock by more than 9% on average per year.

With the effects of compounding interest, choosing a diversified investment strategy could lead to substantially higher retirement savings over the long term.

Get a review of your AT&T 401(k)

For a clear understanding of your 401(k) plan, it’s essential to go through the Summary Plan Description (SPD). Think of it as your go-to guide for all things related to your 401(k) investments. It’s packed with important details that you should be familiar with before making any investment choices. If you don’t already have a copy, you can easily get one by reaching out to your 401(k) Plan Administrator.

Recognizing that each employee’s financial situation and retirement goals are unique, we encourage AT&T employees to seek personalized advice.

A professional review of your AT&T will help you determine how to invest your 401(k) contributions and AT&T’s match.

Advance Capital Management advisers are equipped to offer tailored recommendations, ensuring that your investment strategy aligns with your risk tolerance, financial goals and retirement timeline. You can schedule an AT&T 401(k) review with an adviser right now.

Or learn more by downloading your FREE COPY of The AT&T Employee's Guide To Retirement here.

Bottom line

Navigating the nuances of 401(k) contributions and matches can be daunting, but as an AT&T employee, it presents a golden opportunity to enhance your retirement savings significantly. By understanding the company’s matching policy, strategically investing these funds, and seeking personalized financial advice, you can turn your 401(k) into a powerful tool for securing a financially stable future.

It’s not just about saving; it’s about strategically growing your nest egg for a secure and comfortable retirement.

Ready to get started? Schedule your free AT&T 401(k) review with an Advance Capital adviser today.

Ryan Theisen, CFP®

Ryan is a financial adviser committed to helping people feel confident and secure in their financial lives and future. Working closely with clients, he incorporates all elements of their lives into personalized financial plans, including investment portfolio advice, tax strategies and saving for college. He is a CERTIFIED FINANCIAL PLANNER™ professional.