If you max out your 401k ($23k), do you spread over 12 months or do it faster?

[Anonymous]

I'm in a fortunate income situation where I can max my 401k. I'm sure lots of people on this board can too, but many can't, so I don't say this to brag.

In any event, I always debate if I should spread my 401k contributions evenly over the 12 months or get them over early, like over 6 months.

What do you all think and do on this issue?

[Anonymous]

depends on whether you have an employer that matches, and what the terms of the match are.

my employer will only match my 401k withholding up to 8% of my gross pay *per pay period.* so if i don't contribute to my 401k in any pay period, then i don't get my match that pay period. also if i am contributing a flat amount per pay period, but my gross pay varies, i still will only get a match for 8% of my gross pay that pp.

if you don't get a match, then another method may make better sense for you.

[Anonymous]

A friend told me to accelerate contributions as they then have longer to compound. She was right. She’d also worth $10M

[Anonymous]

I spread it over 10 months and then use the delta in November and December for holiday gifts and travel. Built in budgeting.

[Anonymous]

I must spread it out due to matching rules at my company.

[Anonymous]

I spread it out to make it easier to get the match. I guess I could weight it earlier in the year (since I put in more than is matched) but it’s a pain to make changes, so I don’t.

[Anonymous]

I have to spread it out because my employer matches per pay period.

My wife’s employer matches per pay period, plus does a true up at end of year to ensure % of final salary by year end is contributed to the employee.

A friend of mine told me that his employer does not place the matching funds in his account until March of the next year (just before taxes are due). So you if you leave your job in January of 2024, you will miss out on all the matching funds you would’ve received for 2023. They also have a long time lag for paying bonuses. Basically, if you leave your job, you are forced to leave money on the table (either the 401K match or your bonus for the previous year).

[Anonymous]

A bit faster, I’m maxed out by Sept. My employer matches 100% up to the IRS limit so I contribute as much as is comfortable from a monthly take home perspective in the early months. It’s always nice come Sept. when I get a bunch of extra money in my paycheck.

[Anonymous]

I do it with bonus in January.

[Anonymous]

12 months so that I get the employer match.

[Anonymous]

Anonymous wrote:I have to spread it out because my employer matches per pay period.

My wife’s employer matches per pay period, plus does a true up at end of year to ensure % of final salary by year end is contributed to the employee.

A friend of mine told me that his employer does not place the matching funds in his account until March of the next year (just before taxes are due). So you if you leave your job in January of 2024, you will miss out on all the matching funds you would’ve received for 2023. They also have a long time lag for paying bonuses. Basically, if you leave your job, you are forced to leave money on the table (either the 401K match or your bonus for the previous year).

You don’t lose out on your match, if you leave at any point. You get a pro-rated share if it’s a partial year and if you leave in January like your example, you get a full year match.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I have to spread it out because my employer matches per pay period.

My wife’s employer matches per pay period, plus does a true up at end of year to ensure % of final salary by year end is contributed to the employee.

A friend of mine told me that his employer does not place the matching funds in his account until March of the next year (just before taxes are due). So you if you leave your job in January of 2024, you will miss out on all the matching funds you would’ve received for 2023. They also have a long time lag for paying bonuses. Basically, if you leave your job, you are forced to leave money on the table (either the 401K match or your bonus for the previous year).

You don’t lose out on your match, if you leave at any point. You get a pro-rated share if it’s a partial year and if you leave in January like your example, you get a full year match.

Nope, that’s not what my friend told me about his company. They pay out 401K matching one time per year in one large lump sum for the previous year. If you are not employed with the company on the date of the payout, you do not receive your matching funds for the previous calendar year. So you lose out on a year of compounding contributions + if you leave before date of matching funds payout, you don’t receive ANYTHING.

[Anonymous]

We have to spread it out to get the full match. We have to even hold some back if we want full match on the end of year bonus. It’s a bit of a guessing game.

ROTH IRAs we do lump sum early.

[Anonymous]

I spread it out mainly for dollar cost averaging even though now it say invest earlier is better..

[Anonymous]

Anonymous wrote:I spread it out mainly for dollar cost averaging even though now it say invest earlier is better..

Also don’t make enough to deduct 60k+ from my first pay check 😅