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

[Anonymous]

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

Same.

[Anonymous]

I spread the 401K match thru the year due to the match.

I accelerate my 401K catch-up contributions by the end of Q2.

[Anonymous]

Spread evenly by pay period for match purposes.

[Anonymous]

OP here - interesting that so many of you are saying you spread it out over 12 months to maximize company match!

My company doesn't work like that - I'd get full company match regardless of how fast I contribute.

[Anonymous]

I have a mega roth that I max out within the first 3 months and foreland my 402k over 13 months as thats how i get the maximum employer match which is another 12k.

[Anonymous]

Anonymous wrote: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?

I work for myself and tend to pay it all in one chunk when I lay my taxes. My max contribution is often $60k.

[Anonymous]

Anonymous wrote:

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.

It would surprise me if this is legal. State and federal law has a lot of protections against wage theft (which also happens a lot). Something for your friend to keep in mind.

[Anonymous]

I front load mine (no employee match).

[Anonymous]

Anonymous wrote:

Anonymous wrote:

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.

It would surprise me if this is legal. State and federal law has a lot of protections against wage theft (which also happens a lot). Something for your friend to keep in mind.

It’s not wage theft. Bonuses and 401K match are discretionary and employer can take them away at any time. If employer sets up hoops to jump through to collect them, it’s not illegal.

[Anonymous]

My former company worked that way--a lump sum "match" but only the following year if you were employed on that date. Matches are not wages and companies can set rules around who gets what. As long as the rules are entirely consistent, they can do it that way. It was more of a "bonus" than a match.

[Anonymous]

I dump my tax return and bonus in there usually by April something. I like to get in there before earnings season even if I don’t spend it all yet. I think I still earn 4% on cash in mine

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

It would surprise me if this is legal. State and federal law has a lot of protections against wage theft (which also happens a lot). Something for your friend to keep in mind.

It’s not wage theft. Bonuses and 401K match are discretionary and employer can take them away at any time. If employer sets up hoops to jump through to collect them, it’s not illegal.

It immediately disqualifies them from safe harbor though. Employer matches must vest immediately with safe harbor.

[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).

Same—I spread the contributions over a year. I think technically my company has an end of year true up. So, if I front loaded they would match the remaining amount at the end of the year. But it just seems easier to spread it over a 26 pay period. So, I don’t have to keep track and worry about a true up.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

It would surprise me if this is legal. State and federal law has a lot of protections against wage theft (which also happens a lot). Something for your friend to keep in mind.

It’s not wage theft. Bonuses and 401K match are discretionary and employer can take them away at any time. If employer sets up hoops to jump through to collect them, it’s not illegal.

It immediately disqualifies them from safe harbor though. Employer matches must vest immediately with safe harbor.

It does not. The way the plan is structured The match is done once at the end of the year. You have no entitlement to it until them It does vest immediately -- the once a year when it is paid. Very normal; not an issue.

[Anonymous]

I do it as fast as possible in case of job loss or whatever. Just a superstitious thing really.