Question - 401K Matching

[tonycar17]

Mustachians......

I have a question into our benefits people and I think this may be a company policy sort of thing, but wanted to ask what people's practical experience has been.

I currently contribute 15% of my income to pretax 401K - with the fairly significant bonus I was just paid, this means I will hit the maximum contribution limit of 18K in the first check in October.  My question is will I forfeit the company match for each paycheck beyond that where I am no longer contributing because I have maxed out?

Again, I have a question into our benefits people, but if this is the case, it would obviously make more sense for me to drop down to a percent where I hit the 18K limit on the very last paycheck so I get the full match throughout the year.

Has anyone run into this and can speak what their experience is?  I am thinking this is a "company policy" thing, but any thoughts are appreciated.

TC

[Splashncash]

Definitely a company policy.  Your employer may elect to still give you the match through the end of the year.  Mine?  Not so much.  If I maxed out early, the match would stop.   I need to contribute enough for every pay period throughout the year to get the match.

[tonycar17]

Thanks Splashncash, that was my inkling. 

I guess the good thing at least is that it is February so plenty of time to get the answer and adjust contribution rates if necessary.

TC

[ooeei]

My boss said he frontloads and they match throughout the year, HR said they match per paycheck.  I suspect my boss is right and HR didn't understand my question, but I'm being cautious and structuring so i hit it the last paycheck of the year.

[ZiziPB]

This is a matter of company policy and varies from place to place.  In my company, the match stops if you stop contributing.  There is no true up or anything like that.  Some other companies continue matching or stop the match but do a true up at the end of the year. 

You should look at the Summary Plan Description for your 401k plan in order to get the answer.  HR departments are often mistaken or misinformed.

[JLee]

My last company did a true-up, so they would match for the entire year if the 401k was frontloaded. My current company does not, so I have to make sure to have at least 7% of my pay going to my 401k in each check (so I get the 3.5% max match).

I would also check with payroll/HR and verify that your bonus is used for 401k calculations. I have a buddy who told me that his employer does not contribute to his 401k out of their bonus.

[tonycar17]

JLee - good point, and I just checked.....there is both my contribution and the EE Match as part my upcoming paycheck, so it appears they do the full and normal match for the bonus.

Waiting for a callback from the 401K Plan Admin so I get the answer right from the source.....

Thanks for all the feedback folks!

TC

[tonycar17]

Just got a call back......no matching once I stop contributing for the year, so I will need to lower my contributions to approximately 11% from here til year end so that I can take advantage of the match for the whole year.

Thank you all!

TC

[afuera]

This is a matter of company policy and varies from place to place.  In my company, the match stops if you stop contributing.  There is no true up or anything like that.  Some other companies continue matching or stop the match but do a true up at the end of the year. 

You should look at the Summary Plan Description for your 401k plan in order to get the answer.  HR departments are often mistaken or misinformed.

My company does a true up at the end of year so if I max out early, I still get the full company match.  I didn't know this and I did all the calculations and changed my contribution so that I would hit the limit on my last paycheck and then late last year I was talking with our advisor from Fidelity and he mentioned that my company did a true up at the end of the year and I felt very silly.