Federal contractor 401(k) match + gold IRA

Updated: July 28, 2026

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Federal contractor 401(k) plans hold a combined $1.4 trillion in defined-contribution assets across the eight largest Department of Defense primes and the top intelligence community contractors. That figure comes from the most recent Department of Labor Form 5500 aggregate retirement bulletin.

The employer match component of those plans is the single largest unforced source of compounding for a contractor in the 55 to 65 age bracket. It is also the most common variable a contractor sacrifices when the rollover timing question to a self-directed gold IRA is decided emotionally rather than mechanically.

Element I of the match-versus-rollover decision is the vesting inventory. Before any rollover paperwork is filed, confirm three numbers: the current-year match accrued, the vested portion of the cumulative employer contribution, and the year-end true-up amount the plan owes if you front-loaded the deferral.

For the parallel dual-account path that follows once the match is captured, see our contractor 401(k) and TSP consolidation guide, which covers basis tracking on a combined TSP-plus-contractor-401(k) rollover.

How the federal contractor 401(k) match is structured

The defining-employer match at a federal prime or intelligence community contractor is governed by the plan document filed with the Department of Labor under 29 U.S.C. §1024 and disclosed on the annual Form 5500 series.

The plan document specifies three variables that together determine how much of the contractor’s elective deferral is matched: the match formula, the contribution cap, and the per-pay-period versus annual computation method. The match formula at the eight largest defense and intelligence contractors typically falls in a narrow band.

Lockheed Martin’s Salaried Savings Plan provides a 50% employer match on the first 8% of base pay deferred, producing a 4% maximum employer contribution for a contractor deferring at least 8%. Northrop Grumman’s Savings Plan provides a 100% match on the first 4% deferred, producing the same 4% employer ceiling.

Raytheon Technologies Corporation Savings Plan provides up to 6% in matching and automatic contributions combined. Boeing’s Voluntary Investment Plan provides a 75% match on the first 8% deferred, producing a 6% maximum employer contribution. Leidos, SAIC, and Booz Allen Hamilton run match formulas in the 50% on 6% to 100% on 4% range, producing 3% to 4% employer contributions.

L3Harris uses a 100% match on the first 4% plus a non-elective 4% safe harbor under IRC §401(k)(12), producing 8% in combined employer contributions for a contractor deferring 4%.

The match can be calculated per pay period or trued up at year-end. The distinction matters if you front-load deferrals to hit the IRC §402(g) elective-deferral cap. That cap is set at $23,500 for 2026, plus a $7,500 catch-up at age 50 or older, plus an additional $3,750 enhanced catch-up at ages 60 to 63 under SECURE Act 2.0 §109.

A per-pay-period match without true-up stops contributing once the participant maxes the deferral, so a contractor who hits $23,500 in September forfeits the match on the four months remaining. A plan with year-end true-up calculates the match against full-year compensation regardless of deferral timing and credits any shortfall in January of the following year.

Vesting schedules and what they mean for early rollover

Vesting determines the contractor’s ownership of the employer’s matching contributions.

Under 29 U.S.C. §1053 (ERISA §411(a)(2)), employer matching contributions must vest on one of two statutory schedules. The first is three-year cliff: zero percent vested for the first three years, 100% vested at the start of year four. The second is six-year graded: 20% vested at year two, 40% at year three, 60% at year four, 80% at year five, and 100% at year six.

Safe harbor 401(k) plans under IRC §401(k)(12) and qualified automatic contribution arrangement plans under IRC §401(k)(13) require immediate full vesting on the safe harbor match component.

The eight largest contractor plans land at three distinct vesting points. Lockheed Martin Salaried, Northrop Grumman, and Raytheon use three-year cliff vesting on the matching contribution. Boeing, Leidos, and SAIC use the six-year graded schedule. Booz Allen Hamilton uses immediate vesting on the discretionary match.

L3Harris immediately vests both the safe harbor 4% non-elective and the matching component because the plan is structured as a safe harbor 401(k). A contractor planning a partial rollover to a self-directed IRA needs to know which vesting schedule applies before any in-service withdrawal is initiated. Rolling out before a cliff or before the next graded step forfeits the unvested portion permanently.

Vesting credit is calculated on hours of service, not calendar years. Under 29 U.S.C. §1052, 1,000 hours of service in a plan year counts as one year of vesting credit.

A contractor whose tenure straddles two plan years may have accrued an additional vesting year that has not yet appeared on their statement. The plan administrator’s response to a written vesting-status request under ERISA §104(b)(4) is the authoritative answer. Request that letter in writing before any rollover paperwork moves.

True-up rules and the September-to-December match shortfall

A true-up provision tells the recordkeeper to recalculate the annual employer match against full-year compensation at year-end, then deposit any shortfall. Plans with a true-up: you can front-load the deferral without penalty. Plans without: front-loading produces a permanent match shortfall.

Of the eight contractor plans surveyed, Lockheed Martin Salaried, Northrop Grumman, Boeing Voluntary Investment Plan, Raytheon, and L3Harris include true-up provisions. SAIC’s plan added a true-up effective the 2023 plan year. Leidos and Booz Allen Hamilton do not include automatic true-ups, though both allow participants to request a discretionary true-up under specific separation scenarios.

A contractor at Leidos or Booz Allen Hamilton who plans a December separation or a December rollover should deliberately spread the deferral evenly across pay periods to avoid the late-year match shortfall.

The true-up is deposited in January or February of the following year, after the plan administrator has reconciled the annual compensation and deferral records. A rollover initiated in November or December before the true-up is credited typically captures only the pay-period match accrued through the rollover date.

The true-up that arrives in February of the following year then has nowhere to land in the source plan because the participant balance is zero. Most plans handle that residual as a forfeiture to the plan’s general forfeiture account.

The fix: delay any rollover initiated in November or December until the true-up has been credited and the plan administrator has confirmed the final employer contribution amount in writing.

The correct sequence: capture, vest, roll

The full match-then-roll sequence has six discrete steps. Done in this order, the contractor captures the maximum employer match for the current plan year, confirms vesting, and initiates the rollover only on the vested-and-credited balance. Done out of order, the contractor leaves between 1% and 8% of annual base pay on the table per missed match year, with that shortfall compounding for as many years as remain before withdrawal.

Figure 1. The six-step capture-vest-roll sequence. Steps 1 through 3 secure the full current-year match and confirm vesting status. Steps 4 through 6 execute the direct rollover on the vested-and-credited balance only.

1. Request a Summary Plan Description and current vesting statement in writing. The plan administrator must furnish the SPD on request under 29 U.S.C. §1024(b)(4). The vesting statement confirms the cliff or graded schedule that applies, the hours-of-service credit accrued, and the current vested percentage of the cumulative employer contribution. Most plans return the documents within 30 days; some return within ten business days on a written request that cites the statute.
2. Calculate the deferral rate that captures the full match through year-end. If the plan true-ups, the participant can defer at any rate that hits the annual IRC §402(g) cap on or before the final pay period. If the plan does not true-up, the participant must defer at a rate that maxes the IRC §402(g) cap evenly across pay periods, neither earlier nor later, to capture the full match. For a 55-year-old contractor at the 2026 limits ($23,500 elective + $7,500 catch-up = $31,000 total), this typically resolves to a 12% to 15% deferral rate on a base pay between $200,000 and $260,000.
3. Confirm the year-end true-up date with the plan administrator. Plans with true-up provisions credit the shortfall in January or February of the following year; the exact date varies by recordkeeper. Fidelity, Vanguard, and Empower each publish a true-up deposit date for each contractor plan they administer. Note that date before initiating any rollover; the rollover paperwork can be filed after the true-up credit lands, not before.
4. Initiate the in-service rollover request (or post-separation rollover request). The exact form varies by plan and custodian. Fidelity uses the NetBenefits distribution request, Empower uses the online distribution portal, and Vanguard uses the Retirement Plans website plus a paper Form. The form must specify the destination custodian’s name and account number, the participant’s name and account number at the source plan, and the rollover type as direct trustee-to-trustee transfer. The check or wire is payable to the destination custodian “FBO” the participant, never to the participant directly.
5. Receive the rolled balance at the self-directed IRA. The receiving custodian credits the rollover balance to the participant’s traditional IRA (for pre-tax 401(k) dollars) or Roth IRA (for Roth 401(k) dollars). After-tax non-Roth basis, if any, is allocated per IRS Notice 2014-54, which permits the participant to direct the basis allocation. The custodian then makes the cash available for the metals purchase under IRC §408(m).
6. Reconcile the 1099-R and Form 8606 at year-end. The contractor 401(k) administrator issues a 1099-R with Distribution Code G (direct rollover, $0 taxable amount) for the year of the rollover. If any after-tax non-Roth basis was rolled, Form 8606 must be filed with the participant’s return to update basis tracking on the receiving IRA. Form 5498 from the receiving custodian confirms the rollover contribution.

After-tax non-Roth contributions and the mega backdoor opportunity

A subset of federal contractor 401(k) plans allow after-tax non-Roth contributions beyond the IRC §402(g) elective-deferral cap, up to the combined IRC §415(c) limit. That limit is $70,000 for 2026, $77,500 with catch-up at 50 or older, and $81,250 with enhanced catch-up at 60 to 63.

These after-tax non-Roth contributions can later be converted to Roth via in-plan Roth conversion under IRC §402A(c)(4), or rolled to a Roth IRA under Notice 2014-54. The pattern is known as the mega backdoor Roth.

Of the eight contractor plans surveyed, Lockheed Martin Salaried, Boeing Voluntary Investment Plan, and Microsoft Federal Services 401(k) allow after-tax non-Roth contributions with in-plan Roth conversion. Northrop Grumman, Raytheon, Leidos, SAIC, Booz Allen Hamilton, and L3Harris do not.

A contractor whose plan permits after-tax non-Roth contributions and who is already capturing the full employer match has the option to deposit between $35,000 and $50,000 additional per year on a post-tax basis. That balance can then be converted to Roth either in-plan or via rollover to a Roth IRA.

The mega backdoor produces a Roth-side balance that, in a future gold IRA, holds metals tax-free at qualified distribution.

The basis-tracking obligation for a contractor running a mega backdoor strategy is Form 8606. Each year that after-tax non-Roth contributions are made and subsequently converted, the conversion is reported on Form 8606 with the basis allocation per Notice 2014-54.

A contractor planning to roll the after-tax non-Roth balance to a self-directed Roth IRA must allocate the basis at rollover. The receiving custodian then tracks the post-tax basis on the Roth IRA side. Most self-directed IRA custodians handle this correctly on intake, but confirm in writing before initiating the rollover.

Match capture compared across the eight largest contractor plans

The annual match-capture maximum is a function of the match formula, the IRS compensation limit under IRC §401(a)(17) ($350,000 for 2026), and any safe harbor non-elective contribution. The contractor’s actual capture is capped at the lower of the formula maximum or the compensation limit times the formula percentage.

The ceiling on a fully-captured match for a contractor at the IRS compensation limit ranges from $10,500 per year (Leidos 3%) to $28,000 per year (L3Harris 8%). Over the typical contractor 55-65 ten-year stretch, the gross difference between best-case and worst-case match capture is between $105,000 and $280,000 in employer dollars alone, before any market growth. That figure is independent of the gold IRA decision; it is the cost of getting the match-versus-rollover sequence wrong.

In-service rollover rules: when the plan allows a partial transfer while still employed

An in-service rollover lets a contractor still employed by the plan sponsor roll out a portion of the 401(k) balance without separation. Under IRC §401(k)(2)(B), in-service distributions are restricted by statute. Most plans permit them only for participants age 59½ or older, and only for the vested portion of the employee elective deferral plus rollover contributions accepted from other plans.

The employer match component typically cannot be rolled in-service unless the participant has reached the plan’s normal retirement age or the plan document specifically permits earlier in-service distribution of vested match.

The eight contractor plans surveyed handle in-service rollover differently. Lockheed Martin Salaried and Boeing permit in-service rollover of the vested participant elective deferral at age 59½, but not of the vested match until separation. Northrop Grumman and Raytheon permit in-service rollover of the full vested balance, including match, at age 59½.

Leidos and SAIC follow the IRS minimum rule (age 59½ for the participant elective deferral, separation for the match). Booz Allen Hamilton and L3Harris permit in-service rollover of the full vested balance at age 59½ because of their immediate-vesting structure.

For a contractor under age 59½ who wants to begin building a gold IRA balance before separation, the rollover candidate is typically a prior-employer 401(k) or a balance from an earlier rollover IRA. The current contractor 401(k) employer-match component remains in the source plan until separation or normal retirement age, whichever comes first.

Common mistakes federal contractors make on match-then-roll timing

Five recurring procedural errors show up in plan administrator case files and in the BBB complaint history for gold IRA dealers serving the federal contractor market. Each has a documented correction path.

Mistake 1: rolling out before the vesting cliff or before the next graded step. A contractor on a three-year cliff who initiates an in-service rollover at month 35 forfeits 100% of the accrued employer match.

A contractor on a six-year graded schedule who rolls out between graded steps forfeits the unvested portion permanently; that forfeiture is not recoverable by a later rehire under most plan documents. Correction: request the vesting statement in writing under ERISA §104(b)(4) and confirm the next vesting step date before any rollover paperwork moves.

Mistake 2: rolling in November or December before the year-end true-up posts. Plans with year-end true-up credit the match shortfall in January or February of the following year. A rollover initiated before the true-up date typically forfeits the shortfall because the source-plan balance is zero when the true-up is calculated. Correction: confirm the true-up post date with the plan administrator and delay the rollover paperwork until after the credit lands.

Mistake 3: reducing the deferral rate to fund a side rollover. A contractor who reduces the deferral below the match-capturing rate in order to free up cash for an outside investment forfeits the match on the difference. The employer match is contingent on the contractor’s elective deferral; cutting the deferral cuts the match dollar-for-dollar within the formula. Correction: maintain the match-capturing deferral rate even during high-cash-need months; the match is contributed cash the contractor does not otherwise receive.

Mistake 4: missing the Form 8606 filing on a partial after-tax non-Roth rollover. A contractor at Lockheed Martin Salaried or Boeing running the mega backdoor strategy who rolls the after-tax non-Roth balance to a Roth IRA must file Form 8606. Skipping that filing leaves the IRS without a record of the basis allocation. File Form 8606 for every year that after-tax non-Roth dollars move out of the plan, whether the conversion is in-plan or via rollover.

Mistake 5: choosing a dealer that pressures the rollover before the match capture is complete. A dealer who proposes to “lock in today’s gold price” before the participant has confirmed vesting and true-up dates is sequencing the work backwards. The metal purchase happens at step 5 of the six-step sequence, not at step 1. Correction: complete steps 1 through 3 (vesting confirmation, deferral rate, true-up date) before the dealer is engaged at all.

Tax treatment of the match-rollover-distribution chain

The employer match, the rollover, and the future distribution interact through three separate tax provisions. Side-by-side treatment matters for a contractor planning the post-rollover hold period and the eventual RMD timing.

The FICA line is the one most contractors overlook. The employer match itself is subject to FICA at the time of contribution. That covers Social Security at 6.2% employer plus 6.2% employee on the first $168,600 of 2026 wages, Medicare at 1.45% on all wages, and an additional 0.9% Additional Medicare Tax over $200,000.

For a contractor at the compensation limit, the FICA on a $28,000 employer match (L3Harris ceiling) runs roughly $4,150 in combined employer-and-employee Social Security plus Medicare. That is paid out of payroll, not out of the match itself, so the contractor’s take-home does not change, but the employer’s cost of the match is the match plus FICA.

Frequently asked questions

Can I roll my contractor 401(k) to a gold IRA while still employed?

Yes, if the contractor is age 59½ or older and the plan permits in-service rollover. The exact scope of the in-service rollover (participant deferral only, or full vested balance including match) is set by the plan document. Northrop Grumman, Raytheon, Booz Allen Hamilton, and L3Harris currently permit in-service rollover of the full vested balance at 59½. Lockheed Martin Salaried and Boeing permit in-service rollover of the participant elective deferral only at 59½, with the match component held until separation.

If I roll out the employer match before the vesting cliff, can I get it back later?

No. The unvested match forfeits to the plan’s general forfeiture account when the participant initiates a distribution before cliff vesting. Most plan documents do not provide for recovery of forfeited match dollars upon rehire. The exception is a short break-in-service rule where rehire within a defined window credits prior service time; that rule restores vesting credit, not forfeited dollars.

Does the mega backdoor Roth strategy work for federal contractor employees?

Only at plans that allow after-tax non-Roth contributions and in-plan Roth conversion (or rollover of after-tax non-Roth to Roth IRA). Lockheed Martin Salaried, Boeing Voluntary Investment Plan, and Microsoft Federal Services 401(k) currently permit it. Northrop Grumman, Raytheon, Leidos, SAIC, Booz Allen Hamilton, and L3Harris do not. The plan document is the authoritative answer; the Summary Plan Description issued under ERISA §102 confirms whether the feature exists.

How does the SECURE Act 2.0 enhanced catch-up at 60 to 63 interact with the match?

SECURE Act 2.0 §109 added an enhanced catch-up of the greater of $10,000 or 150% of the standard catch-up for participants age 60, 61, 62, or 63 in the relevant year. The enhanced catch-up is treated as an additional elective deferral, so a plan that matches on elective deferrals matches on the enhanced catch-up portion within the formula.

A contractor age 60 to 63 deferring at the match-capturing rate captures match on the standard deferral plus the catch-up plus the enhanced catch-up, subject to the IRC §401(a)(17) compensation limit.

What happens if I leave the contractor before the next graded vesting step?

Voluntary separation before a graded vesting step forfeits the unvested portion of the employer match accrued to that date. The vested portion is retained and is fully rollable to a self-directed IRA. The unvested portion forfeits to the plan’s general forfeiture account. The exception is involuntary termination at or after normal retirement age under ERISA §411(a)(8), which forces 100% vesting on the employer contribution regardless of the graded schedule.

Does the contractor 401(k) match interact with my TSP or military retired pay?

No direct interaction. The contractor 401(k) match is independent of any TSP balance from prior military or civilian federal service, and independent of DFAS military retired pay or VA disability compensation. For the dual-account consolidation pattern that combines a TSP balance with a contractor 401(k) balance into a single self-directed IRA, see our contractor 401(k) and TSP consolidation guide.

The vesting statement is the procedural deliverable. Before any rollover paperwork is filed, you should have on a single page: the cliff or graded schedule that applies, the next vesting step date, and the current vested percentage. Also document the year-end true-up date, the current-year match-capturing deferral rate, and whether the plan permits in-service rollover at your current age.

With those numbers in hand, the rollover-timing decision becomes arithmetic. Calculate how much match is at risk in the current plan year, how much vests on the next step date, and when the rolled balance will be available for the metals purchase.

The dealer-selection decision sits underneath that arithmetic; a dealer that pressures the rollover before the match capture is complete is sequencing against the contractor’s interest. The check on gold IRA dealers is the starting point for that decision.

Sources cited

1. 26 U.S.C. §401(k), §401(m), and §415(c), Employer-Sponsored Defined Contribution Plan Rules
2. 26 U.S.C. §402(c)(1), Rollover of Employer-Sponsored Plan Distributions to an IRA
3. 29 U.S.C. §1024(b)(4), ERISA Plan Document and Summary Plan Description Disclosure Requirements
4. 29 U.S.C. §1053, ERISA Minimum Vesting Standards (cliff and graded schedules)
5. IRS Notice 2014-54, After-Tax Rollover Allocation from Employer Plans to Roth and Traditional IRAs
6. SECURE 2.0 Act of 2022, §109, Enhanced Catch-Up Contributions for Participants Age 60 to 63
7. U.S. Department of Labor, Private Pension Plan Bulletins (plan statistics and vesting data)

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