Your 401(k) match is billed as "free money," but high-income workers may be getting an unfair share

The 401(k) is now the most popular type of retirement plan, with many employers providing a company match when workers sock away money in their accounts. But these matches — often shorthanded as "free money" from your company— may exacerbate inequality in retirement, new research finds.

About 44% of employer matches are directed toward the top 20% of earners, according to a May study from researchers at Vanguard, Yale University and the Massachusetts Institute of Technology. By contrast, the bottom 20% of workers receive just 6% of their employers' matching contributions, the analysis found.

There's a lot of money on the line, as corporations provided about $212 billion in matching contributions in 2021, or almost 60 cents for every dollar saved by workers, the study noted. But the bulk of those employer dollars are more likely to go to higher-income workers, even though businesses typically dangle their 401(k) matches as a way to convince all workers, regardless of income, to save for retirement.