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Don’t Miss Out on the End of Year Employer Match

Last year I contributed, $15,000, the maximum amount allowed, to my 401(k). My employer matches my contributions dollar for dollar up to 3%, so last year I should have received roughly $3,000 worth of employer contributions. Unfortunately, a rookie mistake prevented my employer from contributing the full amount.

In essence, I forgot to ensure that my 401(k) contributions would be evenly distributed over 26 pay periods. So I accidentally hit the $15,000 saving limit with my 25th paycheck. Since I didn’t contribute in the 26th pay period, my employer didn’t provide the company match. That resulted in a loss of over $100 worth of employer contributions.

Okay, okay, so the loss of $100 isn’t so bad, but nonetheless I lost out on free money simply because I didn’t play by the rules. So this week I looked over my 401(k) contributions and realized that I would hit the current limit, $15,500, again with my 25th paycheck. So I immediately adjusted my contribution rate to ensure that I receive the full company match, up to and including my last paycheck of the year.

** Please see the comments associated with this post. A helpful reader pointed out that employer matching should continue regardless of whether you reach the 401(k) limit in the first four months or contribute for all 12.**

erika

Friday 19th of October 2007

yay! i'm glad this is true for your plan as well!

One Frugal Girl

Thursday 18th of October 2007

Well thanks to Erika's comment I can officially say this post is in fact inaccurate.

I had assumed the company match would appear in my paycheck just like all the other employer contributions, thus when I didn't see the match I assumed my company had not contributed. But I logged in to my 401(k) account and found my employer's contribution in the transaction history for December of last year. Although my paycheck does not reflect the contribution my 401(k) account does.

Thanks so much Erika for pointing this out. I do apologize to anyone who I may have misinformed.

erika

Thursday 18th of October 2007

make sure you are right about this. i administer the 401K at my work, we match 4%, and if an employee contributes 6 % for 1/2 the year, then nothing the 2nd 1/2, we have to match 4% of the annual salary UP TO THE TOTAL annual amount contributed. ie, they should still pay it in. if your administrator doesn't know, and he/she might not, have them call the benefits manager.