Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (6) | Ignore Thread Prev Thread | Next Thread
Author: 4inthefamily Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 25247  
Subject: Fast Question Date: 12/6/2007 3:41 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
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
Print the post Back To Top
Author: PayingFool Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 22707 of 25247
Subject: Re: Fast Question Date: 12/6/2007 5:37 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
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.

Print the post Back To Top
Author: Parkway Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 22708 of 25247
Subject: Re: Fast Question Date: 12/6/2007 5:43 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
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

Print the post Back To Top
Author: 4inthefamily Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 22709 of 25247
Subject: Re: Fast Question Date: 12/6/2007 5:44 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
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

Print the post Back To Top
Author: VikingErik Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 22710 of 25247
Subject: Re: Fast Question Date: 12/6/2007 7:48 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Obviously, they will not be taking any 401(k) money from our next check

Actually, 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

Print the post Back To Top
Author: MikePSD Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 22714 of 25247
Subject: Re: Fast Question Date: 12/6/2007 8:31 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
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

Print the post Back To Top
UnThreaded | Threaded | Whole Thread (6) | Ignore Thread Prev Thread | Next Thread
Advertisement