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Your nephew can continue to contribute $2000 annually to his IRA assuming that his adjusted gross income does not exceed the limits.
OK, say his gross income is $2000 a month and he contributes $300 a month, or 15% of it, to his 401k plan. The employer has promised to add 80% of that, or $240 a month, until he has put in 6% of his annual income, or $1440 in a given year. At that point the employer contribution stops. Since the contribution is in company stock, they will calculate shares and fractions of share after every pay period. Probably he will not know the number of shares except from a quarterly report from the plan administrator.
There may be a vesting period for the employer contribution. A usual one would be a 5 year period.
If there is, that would mean that while the statement he gets quarterly shows his contribution and separately the employer contribution, he may not, if he should leave the job, be entitled to the employer contribution until he has been employed for 5 years.
If he were to leave the job after one year, he would get his own contributions plus or minus any investment returns for the period, but would forfeit the employer contribution. "Vesting" periods are common and should be explained in the information provided. It is also possible that there might be a sort of buy-in schedule for vesting, as 10% after one year, 20% after 2, 40% after three, something like that and as long as 7 years to full vesting. Most common is a five year, all-or-none so that if one leaves a job after 4 years 11 months, all the employer contribution would be forfeited.
Sometimes employers are accused of firing employees just before they would vest in company contributions, and you can bet there are lawsuits about that.
Your nephew can go right on with his Roth and if his income is in the $2000 monthly range, there will be no problem.
Best wishes, Chris
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