My husband’s employer provides a 5% match contribution. Or so they say. So of course we take full advantage; we’re no fools. Or so we thought.
So I just randomly decided to read my husband’s employer’s retirement plan Summary Annual Report. I was cleaning up our home office, sorting through ridiculous amounts of mail and paperwork, and there it was. As I worked my way through it, I came to an illustrative example of how the matching contribution (5%) is calculated. Son of a bitch! Here is the excerpt:
"If you contribute large amounts early in the calendar year and reach the $17,500 legal limit on 401(k) Before-Tax Contributions before the end of the calendar year, you will not receive a XXXX Matching Contribution for any pay period in which you do not make 401(k) Before-Tax Contributions. As a result, there are times where consistently contributing a lower amount (at least 5% of your pay each pay period) will result in a higher XXXX Matching Contribution over the year."
Mother fucker. It looks like we lost 1.2% company match for 2014 because we had set my husband’s deferral election at 20%, which maxed him out early in the year, leaving pay periods towards the end of the year where he had no deferral.
I encourage everyone that receives an employer matching contribution to double check and read the fine print to make sure you aren’t leaving money on the table.
I feel duped.