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Message
re: 401k - Max in January or average throughout year
Posted on 12/27/17 at 10:51 am to Wade Phillips
Posted on 12/27/17 at 10:51 am to Wade Phillips
If your company matches, you will lose out on that money the other 20-22 periods where you aren't contributing. Depending on your plan, that could more than offset whatever tax savings you'd realize.
2
Posted on 12/27/17 at 4:36 pm to GRTiger
quote:
If your company matches, you will lose out on that money the other 20-22 periods where you aren't contributing.
It depends on the 401k plan. Plans can have the "true up" feature which would let you get the full match even if you didn't contribute every pay check. If the plan has that, then it doesn't matter if you maxed out early or started late in the year.
Also, true up will help you if you didn't contribute enough in some pay periods to get the full match, but made higher contributions above the full match in other pay periods.
My last two 401k plans had the true up feature.
This post was edited on 12/27/17 at 4:45 pm
Posted on 12/27/17 at 5:35 pm to GRTiger
quote:
If your company matches, you will lose out on that money the other 20-22 periods where you aren't contributing. Depending on your plan, that could more than offset whatever tax savings you'd realize.
I came here to say this. My company follows this policy, but it wasn't apparent in any of the plan documents. Talk to your 401k admin if you have a match before you pull the trigger on this strategy.
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