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.**