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Author: Rayvt Big gold star, 5000 posts Top Favorite Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75658  
Subject: Re: Too much in the 401K? Date: 5/20/2011 10:43 PM
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If you hit the limit half way through the year, and that stops the deductions, the match for the year comes to only 2% rather than 4%.

Obviously this scenario needs to be reviewed with the employer to understand their plan's actual rules.


In this case, my company (Motorola) did what they called a "true-up" at the end of the year. They figured out what the company match would have been if your comtribution had not been cut off by hitting the max, and put in that amount all at once. IIRC in late January.

I understand many companies do this.

I didn't like it because it's just too danged hard to verify that they did it right, plus they can always change their mind and skip the true-up, plus their money goes in late in time so you miss out on the growth of it. The one time I let this happen, I did check the true-up and it was accurate.

After that, I just planned it so that I put in the max early in the yesr, but cut it down to 3% (the maximum company match amount) about mid-year, so that I'd hit the max on my last paycheck of the year.
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