I had timed our 401(k) contributions to "max out" with our last paycheck this year. My husband's employer matches 100% of the first 4% of our contribution. I just received the stub for his December 7 paycheck which includes his end-of-year bonus and found that (differently than last year) they took 401(k) money from his bonus and now it is maxed out for the year. Here's the question. Obviously, they will not be taking any 401(k) money from our next check - the last of the year, but will we still get the 4% match since our contribution rate is still set above that amount?-4
Here's the question. Obviously, they will not be taking any 401(k) money from our next check - the last of the year, but will we still get the 4% match since our contribution rate is still set above that amount?Maybe, maybe not. You'd have to read the Summary Plan Description provided to all 401(k) participants. Some employers only match contributions as they are made, so there's no match if the contribution from that paycheck is zero. Other employers do a year-end "catch up" or "true up" match based on annual contribution.
Obviously, they will not be taking any 401(k) money from our next check - the last of the year, but will we still get the 4% match since our contribution rate is still set above that amount?I suspsct this is plan-specific, but I know my employer does continue the match (I max out early so I can be sure to max out even if I leave the company early.)I checked, and the details are in our summary plan description (SPD), which is available on our intranet. Do you or your husband have access to his SPD?Here's the excerpt from mine:Some employees will reach the IRS maximum contribution limit...before the end of the calendar year. These employees will continue to receive a match as they are considered active participants in the Plan. This will be done by assuming that their Salary Deferral Contributions continue until the end of the year (or until they would otherwise stop) at the percentage rate they had elected, until the maximum match amount under the terms of the Plan has been reached. An employee who voluntarily chooses to stop his/her Salary Deferral Contributions for some period of time during the year prior to reaching the contribution limit will not receive the Company match during the period of time they are not contributing.- Parkway
Thanks for your response. There isn't a whole lot I can do about it at this point either way - so I'll just watch the last paycheck and make sure not to let it happen again next year if we lose a little bit of match over it.-4
Obviously, they will not be taking any 401(k) money from our next checkActually, they may still do so. The well-known annual 401k limit is for tax-deductible contributions, but once that's reached, after-tax money can still go into the 401k. This is a bad deal, since it's strictly inferior to investing that money in a regular taxable account instead. You might want to check if this will happen -- it did to me last year and now I'm stuck with $600 of after-tax money in my 401k.- Erik
That depends on your company's plan. Mine did not give the match if you put in the max early. It was done on each paycheck. This year they changed it so I would get the entire match either way.Good Luck.Mike
Best Of |
Favorites & Replies |
Start a New Board |
My Fool |
BATS data provided in real-time. NYSE, NASDAQ and NYSEMKT data delayed 15 minutes.
Real-Time prices provided by BATS. Market data provided by Interactive Data.
Company fundamental data provided by Morningstar. Earnings Estimates, Analyst