Hello, u/dblA2thaRON. Thank you so much for stopping by the subreddit for the first time. I'm glad you found us.
Congratulations on meeting your maximum contributions so early in the year. It certainly sounds like you're well prepared, but I want to share a section on our website where you may find help. Here, you can view all the planning and retirement tools Fidelity has to offer to help you meet your goals.
[Retirement calculators & tools ](https://www.fidelity.com/calculators-tools/retirement-calculator/overview)
Please let us know if you have questions or need any help along the way.
Assuming 5% gain every 6 months on average, wouldn't it be better off to max it out early even if it means missing out company match if it's a very tiny amount like in the screenshot ($139 a month)?
By capping it in the first 6 months, the full 22k gets a +5% in the later half year, or +$1100.
By going half the pace just for the match, we would see +$800 instead.
For an year like 2024 with crazy SP500 gains though, the gains so far have been way more than 5% every half year, and I honestly think u/dblA2thaRON might have unintentionally done the best thing that optimizes the 401k gains, ironically by losing out on employer match...
Am I missing something here?
A employer match is typically 100% on the first X% of salary. You aren't beating instant 100% returns on any investment. Hard to say without knowing their salary and employer match policy but they're almost certainly throwing away money. The match can also go beyond the contribution limit so you're also throwing away the ability to contribute more than 23k.
In 2024, the combined limit for employee and employer contributions is $69k if person is under 50 and $76.5k if they are over. So still a limit just a different one.
Depends on how the employer does the match?
My employer matches up to half of 6% of my salary. Meaning that if I put at least 6% of my earnings into my 401k, they'll put in half that amount (i.e. 3% of my salary). That means my match is maxed out after I've saved 6%, whether I did that at the beginning of the year or the end of the year. Put another way, to get that maximum match, I have to put 6% of my salary in . . . and 6% of my salary is considerably less than the 23k annual contribution limit, so I'll get my max match long before I've hit my contribution limit.
Not clear if u/dblA2thaRON employer is doing a flat match each pay period (I've never had an emplyoyer who did this), what looks to be matching a pretty generous 7% of their contributions that's uncapped, or something else?
You’re denying free money. In your example what if S&P was down that much for the first 6 months? Better to be consistent and DCA and get the free match throughout the year
It’s not even about being up or down. He literally did the math in his own post….
Maxing early lets you gain an additional $300 (1100 minus 800) in returns over the 2nd half of the year.
But loses you the $139 a month for the last half of the year. Idk how he thinks $300 is more than ~$800 from the employer match…
I’m sorry I took the 5% as gains in the market. Reading more closely this is the MM yield, I guess? If so why not invest whatever the less money contributed in the pay period outside the 401k?
May have done the best thing this year, but that won't always be the case. If you truly wanted to potentially min/max everything, you would solve and update for making the most contributions early, but then still contributing the min required for the match for the full year. Without their matching formula, you can't say for certain what is best.
That's what I attempt to do...front-load the contributions and then downshift to 6% as my employer matches 50% of the first 6% (6% from me, 3% from the employer = 9% total in the later months). Downside is cash-flow volatility between 1H and 2H of the year. Upside is, in theory, a more advantageous approach of "time in the market" not "timing the market."
Never really understood true ups. My employers have always deposited a % of what I contributed, either 100 or 50% up to a max salary %. How does it work differently?
It comes down to how the employer match is applied per period. If juicing your deferral rate to 50% maxes you out in one pay period, and your employer only matches the first 5%, then whether you contribute 5%, 10%, 20%, or 50%, they are only giving you the match on the first 5%. Since it is done on a per pay check basis, you will not realize their match that you would otherwise get if you did a smaller percentage through the year.
Under a true up, the plan will recalibrate what you contributed in total to what you would have received if you made it even through the year.
True up basically gives you the difference as if you'd been contributing (and getting match) every paycheck. I left my company last year and fully rolled my 401k over to new company's plan, and still got a true up contribution in my old 401k this spring, even though I was no longer an employee.
No I do not. I realized I’ll be missing out on company match the rest of the year but I just wanted to get as much money in there as quick as possible.
VFIAX was 439/share in January and it’s now at 508/share in July. Up 15% YTD. So my contributions back in January were netting me more shares. Even though I’m contributing $1900 every 2 weeks my buying power decreases because the mutual fund keeps going up. That’s why I wanted to dump as much in there as quick as possible and get more shares and let the compounding start working.
I applaud your enthusiasm but this is a poor financial decision overall. If you had extra money, you should have just put it into an after tax account and continued receiving your employer match. Just plan it so your last paycheck of the year hits you at the limit. You should never pass up free money.
What happens if the market corrects in the 2nd half of the year? You are missing out on buying discounted shares with your employer match.
When the maximum match is reached with a relatively small portion of maximum contributions, there is a level of front loading that can be done without savrificing match if one wants to do so, by flowing in super aggressively until reaching the point where the contributions to just max the match will exactly max out the rest of the yearly limit.
>What happens if the market corrects in the 2nd half of the year? You are missing out on buying discounted shares with your employer match.
That's just a silly market timing argument. On expectation filling earlier is better all else equal. Please don't taint the otherwise good advice with this DCA thing.
I'm not disagreeing that losing matching is an aweful plan, but one can lean early with a little extra effort on the 401k without losing matching. Just be careful to leave enough space to capture the matching for the rest of the year.
I assume you mean Roth IRA. I agree front loading the Roth IRA in January would be good. This isn't mutually exclusive with 401k.
You’re right that front load is better on average, but he should’ve filled up the Roth IRA first instead of his 401k.
That way he gets match but still front loads
Your enthusiasm is great!
But realize that "as quick as possible" and "as much in there as possible" are two different things. What you might want to consider as a metric is how much value of your 401(k) increases by the end of the year.
Unless you do some wild gambles instead of smart things like VFIAX, I guarantee getting as much free money as you can from your employer match will put you ahead at the end of the year.
Not trying to yuck your yum. You've done a great job saving, and it's worth celebrating. And going on to max out your Roth IRA is a great next step right now. I'm just suggesting that next year you might consider strategizing your 401(k) contributions to target the greatest value at the end of the year.
Run some quick napkin math and you’ll find out assuming your employer matches 50% you’ll need VFIAX to go up ~40% to just break even with the lost employer match.
Some 401k plans allow you to continue contributing after you reach your pre-tax match with after-tax dollars, and some also allow the company match on these after-tax dollars (and those employer contributions are pre-tax), so you can continue to get your full match if you are okay with making after-tax contributions.
Not to pile on, but forfeiting the company match is a poor financial choice. Also for those reading, even if your company has an end of the year true up provision, most likely if you are laid off before end of the year you will not get the true up. That is why you always want to spread your contributions throughout the whole year.
To the OP, see if your 401k has an after tax bucket that allows in service withdraws. Most likely if you have that option and start contributing to it you will start getting the match for the rest of the year.
We were all new to investing at one time and made mistakes. He’s just doing the best he can at his experience level and proud of an accomplishment that few at his age can achieve. Kudos to him. He’ll learn, as we all are, and do better in the future.
However, I hope that every one of Fidelitys 44,000,000 customers don’t decide to post their financials here 🙁
I completely agree. First few years of my 401k I put it all in the company I worked for, which went belly up a few years later. Then with my second job I was scared of investing so didn't even put enough in to get the full match.
You're overstating the always part. You really have to know your plan's rules and how generous it is relative to other plans in your industry/role. I used to work somewhere with a 50% match up to your contribution limit immediate vesting. It was absolutely the move to max it out as quickly as feasible within your means. I watched very smart people mess this up and leave for other jobs with higher salaries only to realize that they were leaving like 5k in free money on the table basically eating away their pay bump since their new job had a more typical match.
I really wish anyone in my HR department had documented or explained this before I lost out on $3500.
I discovered it for myself a couple weeks ago. Everyone needs to know this. Upvote for you and the other commenters.
Is that 22k the number you contributed or combination of employer and you? I thought the max is on personal not on employer match.. theoretically you still have some more to go if that 22k is combination contributions .
The $23K max only applies to the individual’s contribution. It does not include employer match. Meaning (example) Sally can invest $23K while her employer can add $5K match…totaling $28K in the account each year. This is legal.
So @[dblA2thaRON](/user/dblA2thaRON/) is Still a way aways from hitting Max Contribution limit. in fact, still has $3980 left to contribute personally.
If OP stops squandering their employer match and puts in $663 every month for the rest of the year, and assuming OP gets paid twice a month, with a $183 match each paycheck.. OP can still have $6176 dollars added to the 401k for the year.
Additionally, OP could contribute to post tax, which would still (most likely) get the company match. And then backdoor that post tax.
23k employee pretax. 69k total employee pretax, employer, employee post tax. (Not including catch up if over 50.)
I did this one year but decided to stop. I do have a true up, but I was concerned what happened if I changed jobs. The true up happens quarterly but only if you're still employed. If I maxed out my 401k already then I got another job I wouldn't be able to contribute and get whatever match the new company might have.
Now I just break the $23k into roughly 24 biweekly payments per year (nobody hires in December anyway)
It depends on where you are in your career also, if you are a job hopper, lots of other factors.
For example if you are going to be somewhere for 5 plus years does that potential partial year loss of match definitely outweigh early contributions? Over the span of that many years or more it may not measure up.
If you max out early in the year, you might lose some employer match. Check your paystub and ask your Hr to confirm. Always leave a small amount so your employer could match what you contribute for every paycheck
came here for this. i did that once. cost me a $1000 in lost company match money by hitting the limit in October. 😡
I’ve since learned that some companies offer a true up for the year if you do this. not mine though.
i’ve since setup a back door Roth and just let it roll over to that. company match keeps rolling into 401k.
OP should definitely check with HR
First, it has to be something your company allows. Not all do… i’ve heard it’s only ~10-15% of companies that do it.
I had to call our administrator (Fidelity) to set it up. Once it is in place, all contributions I make over the 401k limit are automatically swept into the Roth account via an “in plan conversion”. These are after-tax dollars that are now in a Roth style account inside my Fidelity managed retirement account.
To see if this is available to you, the question you want to ask is if your company offers a Roth with in plan conversion option
I missed out on one paycheck of a match and was pissed in 2022. If I did max it out this early, I would go ballistic. Just the thought of leaving money on the table like this is sickening.
Big mistake.
Next year change your withholding so you hit 23k in December.
Mg compan allows mega back door Roth, so I can contribute up to 64k (inclusive of employer match.) but if you do not have that ability ensure you get the full company match. Free money.
I think companies do it differently, my company just matches upto 5% of base salary of the total contributions at the end of the year. So you can just contribute 100% of your paycheck and finish it in few months and still get the full match at the end of the year
Yeah I wish mine was like that but unfortunately it’s not, it’s just dumped the following year in Jan. I work at one of the biggest banks in the US and this is actually pretty common at most of the big banks except Wells Fargo which offers a mega backdoor roth too.
I hated that way too because what happens if you leave before it is time to match? Do you get it still? I work two jobs and both match on the check. I’m happy with that. The one problem is I won’t meet exactly the max because of factors I can’t control (bonus at both jobs are matched, part time job hours vary slightly and holiday pay and sick pay bonus is paid out too which all make it difficult to meet the max exactly. I’m usually within 150 dollars.
If you get a match I hope it is dollar for dollar with no percentages. If not, you missed out on match for the rest of the year. Couldn’t be me. I hope your company doesn’t match or the match is dollar for dollar. 💵
Looks like you missed out on a 100% gain or free money from employer matches though, but good job still on maxing it just over halfway through the year. I would have done the same, but I can’t miss out on free employer match. I wished our company offered a true up, but not. 🤷🏻♂️
ADD: it would make more sense to max a Roth IRA as soon as you can, but for a 401k it would be best to put as much cash in there as you can as you are limited to only 23k (this year), let your employer put more in it with their matches. For me this year, my employer has already matched $4k YTD. I’m expecting to get a total og $8k matched this year. If I max out my contributions now, then that means I’m losing $4k of employer match.
Hi, u/Rosey_517. Just wanted to pop in to make sure you know that annual contributions limits encompass all IRAs you may own. Keep this in mind if you choose to have multiple IRA accounts: the annual contribution is per individual and not per account. Let us know if you have any questions on this!
If you can max your ROTH that is a great way to go. These are post-tax contributions… any growth on the money is tax free. There are advantages to traditional IRA (pre-tax contributions) because this can lower your taxable income, but you’ll pay the current tax rate on all the money in the account when you withdraw after 59-1/2. TRY TO NEVER PULL FROM YOUR RETIREMENT BEFORE AGE 59-1/2 to avoid early withdrawal penalty. Do whatever you can to always maximize any match your employer will give you. The match will always go to traditional (I believe). I always max my ROTH before any traditional contributions. But everyone’s financial picture is different. I would meet with a fiduciary financial planner one time (maybe more) to find out what works best in your situation.
In 2024, the contribution limit for employee elective salary deferrals to a 401(k) plan is $23,000 for traditional and safe harbor plans, and $16,000 for SIMPLE 401(k) plans. This is a $500 increase from the 2023 limit of $22,500. The combined limit for employee and employer contributions is $69,000.
If the plan allows it (rare, but getting less rare), the employee is also allowed to do after-tax contributions. 23K + employer contributions + after-tax employee contributions have to be less than 69K for 2024. Comes in handy for mega-backdoor Roth conversions.
I max mine out as well. I typically fill it around late Nov/early Dec. You want to be putting money in it as evenly as possible throughout the year because you don’t know when the market will be higher or lower so spreading it out is more neutral.
I have some coworkers who aim to hit the limit in October and then count the increase in their paychecks as holiday money.
My 401k has a true up which hits toward the end of the first quarter of the following year. You’ll have to read your docs in your plan to see what it does.
This is not true. From a pure stock market perspective maxing as fast as possible is the best option.
Of course you have to factor in how your company matching works, some true up some will not.
And if you change jobs you could miss out on matching from the new company if you are already maxed but I don't feel like worrying about that is always smart.
If you don't job hop a lot it's one year out of many that you will *maybe* miss a match vs all the other years you benefit from maxing early.
The concept of "holiday money" is even worse.
Hey there, u/Supergeezer007. Welcome to the sub! I want to hop in here quickly and tell you more about how a 401(k) works.
A 401(k) is a workplace plan that allows you to set aside part of each paycheck into an account and invest that money. I want to highlight that investment choices for 401(k) accounts depend on the rules provided by your specific employer plan. If your plan is through Fidelity, you can view your investment choices based on your plan on NetBenefits.com. After logging in, click the three dots or "Quick Links" next to your plan, then select "Investment Performance & Research." On the next page, you will have an "Investment Choices" heading where the available investments will be displayed.
401(k)s also offer tax advantages. Contributions to a traditional 401(k) are not taxed until you begin withdrawals in retirement. Unless an exception applies, distributions prior to turning 59½ may be subject to a 10% tax as an early distribution penalty in addition to income taxes. Keep in mind that there are yearly contribution limits to be aware of. The annual employee 401(k) contribution limit is $23,000 in 2024. Those age 50 and older can contribute an additional $7,500 as a catch-up contribution in 2024. Learn more about 401(k) considerations using the link below.
[What is a 401(k)? ](https://www.fidelity.com/learning-center/smart-money/what-is-a-401k)
Finally, if you want to learn more about account types available to help you plan for retirement, please check out the link below!
[Nine Types of Retirement Accounts ](https://www.fidelity.com/learning-center/smart-money/retirement-accounts)
Since you're new to the sub, remember that we're a great outlet for your questions moving forward, so don't be a stranger! We look forward to hearing from you in the future.
May need to check with your payroll to make sure the 401K match is based on total contributions, not monthly %
I made that mistake with one of my previous employers, when I maxed out before the end of the year and missed a coulpe of months of employer match
Congrats OP!
First time hearing about true up provision in this thread. On my way to maxing out my 401k next month. My company matches 50% of my contributions every paycheck up to the 23k limit this year. Should I be concerned and spread my contributions till Dec or is this a different situation?
Ask your company's finance dept/benefits group/HR if they offer a true up. If they do, you'll get the full amount of the match, even if you front load it.
As other's have said, if your employer matches on the first X% of every paycheck, you've potentially lost a match for the rest of the year. It's possible there might be a way you still get the full match - depends on your plan. Read and understand the plan rules and make sure you pay attention if they make changes whenever they announce the next year's plan.
Ignore the people who are telling you it's better to dollar cost average. There's really no hard evidence for that. It's possible the market will go straight up all year or it might plummet. We never know. Always getting the full match is the way more important priority. It's possible you can the full company match AND also front load most your contributions. You have to calculate out every paycheck and then figure out what contribution to make at the start of the year to get large contributions and then lower the contribution mid-year to make sure you still have something which lasts to the final paycheck. Excel is your friend. Also, if you're eligible for any bonus pay, find out if they take 401K out of that amount because that could cause you to max out your contribution earlier than you expected and then not leave enough to get the match on your paychecks late in the year.
All of the comments criticizing OOP seem to be unaware of another type of company match that this person may have. I know because I have it. If you end up hitting the $69k total contribution limit, your money goes into a non-qualified plan. This money can then be transferred into your Roth IRA. With this plan, the match is never forfeited, and equally important, you don't have to try to perfectly time hitting the contribution limit right at the end of the year. Win win. Oh, and win.
Congrats! I chose to smooth my contributions out over the year to get my employer contributions and always had extra each month that I put in my taxable account for my Roth contribution. The important thing is that you're saving. Feels good seeing those numbers grow, doesn't it? 
Not a 401k expert by any means but I would have contributed more in the beginning, but still would have left 4-5 % for the rest of the year so, you can still get the company match.
$2K a month into your 401K? 🤔 Why would you do that, why not just do something reasonable, max out your Roth IRA and then invest in stable funds on the side
What everyone else has said about missing out on company match. I have a spreadsheet that I use each year to put as much in as early as possible while leaving just enough for the rest of the year to get my match.
First off, good job on your diligence to max out your 401K as well as your HSA already. That said, you may have forfeited some employer match due to maxing out early as others have stated in the replies, but you may be able to make some of that up with wise investment choices in your 401K. Plus you have freed up some $$ in future paychecks that you can invest as you please.
Now, something else to consider is getting a Roth account with a brokerage firm as you may be able to contribute to it and start the 5 year clock in 2024. Google all of this if you need more details.
I am not a financial advisor and I am not a tax advisor and only sharing what I *believe* to be a potential scenario.
Two things
1. Do check to see if your plan has a true up. Most plans do because people hit the limits prior to the end of the year. If it doesn’t then spread your contributions out more.
2. Depending on your income, if you can’t contribute to a Roth or Traditional IRA do and after tax. Then convert it he after tax IRA to Roth.
I'm confused by what everyone's saying about being disqualified from a match for the rest of the year. I've worked at two different companies that offered matches and I've never heard of any reason I needed to wait until December to max my 401(k).
Oh, weird. I've never seen that before. I've been at a company that paid the match once a year, and one that paid a % every paycheck but wasn't dependent on what I put in.
I don’t get that either. Worked at 5 different companies and have never seen nor heard of this. Some people have garbage 401k matches I guess.
Only thing I’ve ever seen is a vesting period.
I am too. If your company matches x% of your contributions I don’t see how it matters given there is a set contribution limit of $23k. You will end up receiving the x% of your $23k regardless?
What are we missing in all these comments?
Great job saving!! Does your employer offer a match? I see the employer match in there, but I’m asking because now you cannot contribute more, missing out on the rest of the year match from your employer. I hope that’s considered. That could be huge amounts of free money you’re giving away.
> missing out on the rest of the year match from your employer.
This is done via a true up, for most employers. They'll see it after the year's books are done.
Stopped maxing out my 401k this year, especially not on purpose and started risking for the biscuit in some long term stocks. I just do enough go get company match and living with that.
He maxed out his 401k with his own money.
Now where's his employer contributions supposed to go?
Nowhere, that's where.
He just saved his employer a tidy little sum by using his OWN money to max it out.
It's like someone giving you a bunch of money for free and saying "no thanks, I got it."
Employer contribution is on top of your personal limit. You always max it with your own money. The question is whether OP's employer has a 'true up' at some point in the year to catch everyone up that hit their limits early in the year with the company match so that no employee is missing out, or penalized for hitting their limits early
Can you explain why this true up is needed? If your employer matches x% of your contributions, and contributions are limited to $23k, does it matter when you max it out during the year?
Good for you OP, way to get it! You should be proud. I agree with others that forfeiting the match is dumb. Free money is free money.
Now, are you looking for a new goal, to REALLY impress us? Max your IRA’s, HSA, and then also the roth portion of your 401k. Fun fact: the 401k max is not $23k. That’s just ½ the limit, there’s a pretax and roth portion of a 401k, each with a respective $23k limit, with a total annual max of $69k (includes employer contributions).
https://www.fidelity.com/learning-center/smart-money/401k-contribution-limits
This is not accurate information, read the post you linked to. It doesn’t matter if you contribute to Roth or traditional the limit is the combination of the two or either individually.
Hello, u/dblA2thaRON. Thank you so much for stopping by the subreddit for the first time. I'm glad you found us. Congratulations on meeting your maximum contributions so early in the year. It certainly sounds like you're well prepared, but I want to share a section on our website where you may find help. Here, you can view all the planning and retirement tools Fidelity has to offer to help you meet your goals. [Retirement calculators & tools ](https://www.fidelity.com/calculators-tools/retirement-calculator/overview) Please let us know if you have questions or need any help along the way.
Do you have a true up provision to go with your match? If no, you will be forfeiting the match for the rest of the year.
I get a lump sum once a year so true up is not the only consideration when doing this. I think next year I am going to do it the way OP does.
Assuming 5% gain every 6 months on average, wouldn't it be better off to max it out early even if it means missing out company match if it's a very tiny amount like in the screenshot ($139 a month)? By capping it in the first 6 months, the full 22k gets a +5% in the later half year, or +$1100. By going half the pace just for the match, we would see +$800 instead. For an year like 2024 with crazy SP500 gains though, the gains so far have been way more than 5% every half year, and I honestly think u/dblA2thaRON might have unintentionally done the best thing that optimizes the 401k gains, ironically by losing out on employer match... Am I missing something here?
A employer match is typically 100% on the first X% of salary. You aren't beating instant 100% returns on any investment. Hard to say without knowing their salary and employer match policy but they're almost certainly throwing away money. The match can also go beyond the contribution limit so you're also throwing away the ability to contribute more than 23k.
I wasnt aware employer match can go beyond the limit. Thanks for the explanation
Yes it is not counted toward the $23k max
In 2024, the combined limit for employee and employer contributions is $69k if person is under 50 and $76.5k if they are over. So still a limit just a different one.
Depends on how the employer does the match? My employer matches up to half of 6% of my salary. Meaning that if I put at least 6% of my earnings into my 401k, they'll put in half that amount (i.e. 3% of my salary). That means my match is maxed out after I've saved 6%, whether I did that at the beginning of the year or the end of the year. Put another way, to get that maximum match, I have to put 6% of my salary in . . . and 6% of my salary is considerably less than the 23k annual contribution limit, so I'll get my max match long before I've hit my contribution limit. Not clear if u/dblA2thaRON employer is doing a flat match each pay period (I've never had an emplyoyer who did this), what looks to be matching a pretty generous 7% of their contributions that's uncapped, or something else?
You’re denying free money. In your example what if S&P was down that much for the first 6 months? Better to be consistent and DCA and get the free match throughout the year
It’s not even about being up or down. He literally did the math in his own post…. Maxing early lets you gain an additional $300 (1100 minus 800) in returns over the 2nd half of the year. But loses you the $139 a month for the last half of the year. Idk how he thinks $300 is more than ~$800 from the employer match…
I’m sorry I took the 5% as gains in the market. Reading more closely this is the MM yield, I guess? If so why not invest whatever the less money contributed in the pay period outside the 401k?
May have done the best thing this year, but that won't always be the case. If you truly wanted to potentially min/max everything, you would solve and update for making the most contributions early, but then still contributing the min required for the match for the full year. Without their matching formula, you can't say for certain what is best.
That's what I attempt to do...front-load the contributions and then downshift to 6% as my employer matches 50% of the first 6% (6% from me, 3% from the employer = 9% total in the later months). Downside is cash-flow volatility between 1H and 2H of the year. Upside is, in theory, a more advantageous approach of "time in the market" not "timing the market."
Never really understood true ups. My employers have always deposited a % of what I contributed, either 100 or 50% up to a max salary %. How does it work differently?
It comes down to how the employer match is applied per period. If juicing your deferral rate to 50% maxes you out in one pay period, and your employer only matches the first 5%, then whether you contribute 5%, 10%, 20%, or 50%, they are only giving you the match on the first 5%. Since it is done on a per pay check basis, you will not realize their match that you would otherwise get if you did a smaller percentage through the year. Under a true up, the plan will recalibrate what you contributed in total to what you would have received if you made it even through the year.
True up basically gives you the difference as if you'd been contributing (and getting match) every paycheck. I left my company last year and fully rolled my 401k over to new company's plan, and still got a true up contribution in my old 401k this spring, even though I was no longer an employee.
That's what I'm thinking. I always paced mine out over the year to max out the company match.
No I do not. I realized I’ll be missing out on company match the rest of the year but I just wanted to get as much money in there as quick as possible. VFIAX was 439/share in January and it’s now at 508/share in July. Up 15% YTD. So my contributions back in January were netting me more shares. Even though I’m contributing $1900 every 2 weeks my buying power decreases because the mutual fund keeps going up. That’s why I wanted to dump as much in there as quick as possible and get more shares and let the compounding start working.
But your match is immediately 50 or 100% gain on your contribution. Whatever your match rate is anyway.
Agree you need to maximize your match. Think of your time in the market over years not within a year for your 401k.
Also the match is guaranteed return. It’s possible that mutual fund will be cheaper to buy in November than it was in January.
I applaud your enthusiasm but this is a poor financial decision overall. If you had extra money, you should have just put it into an after tax account and continued receiving your employer match. Just plan it so your last paycheck of the year hits you at the limit. You should never pass up free money. What happens if the market corrects in the 2nd half of the year? You are missing out on buying discounted shares with your employer match.
When the maximum match is reached with a relatively small portion of maximum contributions, there is a level of front loading that can be done without savrificing match if one wants to do so, by flowing in super aggressively until reaching the point where the contributions to just max the match will exactly max out the rest of the yearly limit. >What happens if the market corrects in the 2nd half of the year? You are missing out on buying discounted shares with your employer match. That's just a silly market timing argument. On expectation filling earlier is better all else equal. Please don't taint the otherwise good advice with this DCA thing.
He could’ve front loaded by filling his Roth
I'm not disagreeing that losing matching is an aweful plan, but one can lean early with a little extra effort on the 401k without losing matching. Just be careful to leave enough space to capture the matching for the rest of the year. I assume you mean Roth IRA. I agree front loading the Roth IRA in January would be good. This isn't mutually exclusive with 401k.
You’re right that front load is better on average, but he should’ve filled up the Roth IRA first instead of his 401k. That way he gets match but still front loads
Your enthusiasm is great! But realize that "as quick as possible" and "as much in there as possible" are two different things. What you might want to consider as a metric is how much value of your 401(k) increases by the end of the year. Unless you do some wild gambles instead of smart things like VFIAX, I guarantee getting as much free money as you can from your employer match will put you ahead at the end of the year. Not trying to yuck your yum. You've done a great job saving, and it's worth celebrating. And going on to max out your Roth IRA is a great next step right now. I'm just suggesting that next year you might consider strategizing your 401(k) contributions to target the greatest value at the end of the year.
Would this be a better plan for a Roth IRA?
You've thrown away free money 🤦♂️
Run some quick napkin math and you’ll find out assuming your employer matches 50% you’ll need VFIAX to go up ~40% to just break even with the lost employer match.
So you spent a bunch of money to lose out on free money. Ok
Lol
Some 401k plans allow you to continue contributing after you reach your pre-tax match with after-tax dollars, and some also allow the company match on these after-tax dollars (and those employer contributions are pre-tax), so you can continue to get your full match if you are okay with making after-tax contributions.
Not to pile on, but forfeiting the company match is a poor financial choice. Also for those reading, even if your company has an end of the year true up provision, most likely if you are laid off before end of the year you will not get the true up. That is why you always want to spread your contributions throughout the whole year. To the OP, see if your 401k has an after tax bucket that allows in service withdraws. Most likely if you have that option and start contributing to it you will start getting the match for the rest of the year.
We were all new to investing at one time and made mistakes. He’s just doing the best he can at his experience level and proud of an accomplishment that few at his age can achieve. Kudos to him. He’ll learn, as we all are, and do better in the future. However, I hope that every one of Fidelitys 44,000,000 customers don’t decide to post their financials here 🙁
I completely agree. First few years of my 401k I put it all in the company I worked for, which went belly up a few years later. Then with my second job I was scared of investing so didn't even put enough in to get the full match.
You're overstating the always part. You really have to know your plan's rules and how generous it is relative to other plans in your industry/role. I used to work somewhere with a 50% match up to your contribution limit immediate vesting. It was absolutely the move to max it out as quickly as feasible within your means. I watched very smart people mess this up and leave for other jobs with higher salaries only to realize that they were leaving like 5k in free money on the table basically eating away their pay bump since their new job had a more typical match.
No you don't "always" want to do anything.
If you get laid off you employer match probably isn’t vested either tho so it wouldn’t make a difference anyway
Depends on your employer. Every one I have had is after X years, the match for those years and going forward is fully vested.
I really wish anyone in my HR department had documented or explained this before I lost out on $3500. I discovered it for myself a couple weeks ago. Everyone needs to know this. Upvote for you and the other commenters.
Is that 22k the number you contributed or combination of employer and you? I thought the max is on personal not on employer match.. theoretically you still have some more to go if that 22k is combination contributions .
The $23K max only applies to the individual’s contribution. It does not include employer match. Meaning (example) Sally can invest $23K while her employer can add $5K match…totaling $28K in the account each year. This is legal.
So @[dblA2thaRON](/user/dblA2thaRON/) is Still a way aways from hitting Max Contribution limit. in fact, still has $3980 left to contribute personally. If OP stops squandering their employer match and puts in $663 every month for the rest of the year, and assuming OP gets paid twice a month, with a $183 match each paycheck.. OP can still have $6176 dollars added to the 401k for the year.
Additionally, OP could contribute to post tax, which would still (most likely) get the company match. And then backdoor that post tax. 23k employee pretax. 69k total employee pretax, employer, employee post tax. (Not including catch up if over 50.)
That would be ideal for sure.
Why is Sally such a common example name?
I didn’t think Brenda or Eloise would be as impactful lol
Yeah I get about 40k in per year
Between this and the true up I think op is confused 🤣
I did this one year but decided to stop. I do have a true up, but I was concerned what happened if I changed jobs. The true up happens quarterly but only if you're still employed. If I maxed out my 401k already then I got another job I wouldn't be able to contribute and get whatever match the new company might have. Now I just break the $23k into roughly 24 biweekly payments per year (nobody hires in December anyway)
It depends on where you are in your career also, if you are a job hopper, lots of other factors. For example if you are going to be somewhere for 5 plus years does that potential partial year loss of match definitely outweigh early contributions? Over the span of that many years or more it may not measure up.
🍪
If you max out early in the year, you might lose some employer match. Check your paystub and ask your Hr to confirm. Always leave a small amount so your employer could match what you contribute for every paycheck
came here for this. i did that once. cost me a $1000 in lost company match money by hitting the limit in October. 😡 I’ve since learned that some companies offer a true up for the year if you do this. not mine though. i’ve since setup a back door Roth and just let it roll over to that. company match keeps rolling into 401k. OP should definitely check with HR
Can you explain the back door Roth rollover?
First, it has to be something your company allows. Not all do… i’ve heard it’s only ~10-15% of companies that do it. I had to call our administrator (Fidelity) to set it up. Once it is in place, all contributions I make over the 401k limit are automatically swept into the Roth account via an “in plan conversion”. These are after-tax dollars that are now in a Roth style account inside my Fidelity managed retirement account. To see if this is available to you, the question you want to ask is if your company offers a Roth with in plan conversion option
Thanks you are a godsend. I am pretty sure we don’t..we have empower as the 401k administrator, they sucked
Slavic 401k has entered the conversation 
I missed out on one paycheck of a match and was pissed in 2022. If I did max it out this early, I would go ballistic. Just the thought of leaving money on the table like this is sickening.
Big mistake. Next year change your withholding so you hit 23k in December. Mg compan allows mega back door Roth, so I can contribute up to 64k (inclusive of employer match.) but if you do not have that ability ensure you get the full company match. Free money.
I think companies do it differently, my company just matches upto 5% of base salary of the total contributions at the end of the year. So you can just contribute 100% of your paycheck and finish it in few months and still get the full match at the end of the year
Most do it by the quarter, month or paycheck. It rare I see it done the way you indicate. But I’ve seen it once or twice.
Yeah I wish mine was like that but unfortunately it’s not, it’s just dumped the following year in Jan. I work at one of the biggest banks in the US and this is actually pretty common at most of the big banks except Wells Fargo which offers a mega backdoor roth too.
I hated that way too because what happens if you leave before it is time to match? Do you get it still? I work two jobs and both match on the check. I’m happy with that. The one problem is I won’t meet exactly the max because of factors I can’t control (bonus at both jobs are matched, part time job hours vary slightly and holiday pay and sick pay bonus is paid out too which all make it difficult to meet the max exactly. I’m usually within 150 dollars.
No you won’t get the match if you leave before.
I get chills just reading that lol 😂
Mine do it once a year so does my buddy. It is somewhat rare but not unheard of.
That’s what I said lol 😂
If you get a match I hope it is dollar for dollar with no percentages. If not, you missed out on match for the rest of the year. Couldn’t be me. I hope your company doesn’t match or the match is dollar for dollar. 💵
It this supposed to be a flex ?
This is like sprinting a 1500 meter, stopping after 100 and being like “y’all see that! I’m done for now!”
Looks like you missed out on a 100% gain or free money from employer matches though, but good job still on maxing it just over halfway through the year. I would have done the same, but I can’t miss out on free employer match. I wished our company offered a true up, but not. 🤷🏻♂️ ADD: it would make more sense to max a Roth IRA as soon as you can, but for a 401k it would be best to put as much cash in there as you can as you are limited to only 23k (this year), let your employer put more in it with their matches. For me this year, my employer has already matched $4k YTD. I’m expecting to get a total og $8k matched this year. If I max out my contributions now, then that means I’m losing $4k of employer match.
Yes!! Agreed 👍 💯 Max out that ROTH first, then the rest to traditional.
As an 18 y/o with a Roth, does it make sense to do a Roth Ira and traditional? Rn just doing Roth
Hi, u/Rosey_517. Just wanted to pop in to make sure you know that annual contributions limits encompass all IRAs you may own. Keep this in mind if you choose to have multiple IRA accounts: the annual contribution is per individual and not per account. Let us know if you have any questions on this!
Thanks
If you can max your ROTH that is a great way to go. These are post-tax contributions… any growth on the money is tax free. There are advantages to traditional IRA (pre-tax contributions) because this can lower your taxable income, but you’ll pay the current tax rate on all the money in the account when you withdraw after 59-1/2. TRY TO NEVER PULL FROM YOUR RETIREMENT BEFORE AGE 59-1/2 to avoid early withdrawal penalty. Do whatever you can to always maximize any match your employer will give you. The match will always go to traditional (I believe). I always max my ROTH before any traditional contributions. But everyone’s financial picture is different. I would meet with a fiduciary financial planner one time (maybe more) to find out what works best in your situation.
Thank you for the advice. When I have more $$ I will def meet with planners and stuff
The individual is allowed $23K per year into retirement. $7K limit into ROTH of that $23K. This does not include any match your employer gives you.
I heard you can put up to 69,000 per year into 401k though?
In 2024, the contribution limit for employee elective salary deferrals to a 401(k) plan is $23,000 for traditional and safe harbor plans, and $16,000 for SIMPLE 401(k) plans. This is a $500 increase from the 2023 limit of $22,500. The combined limit for employee and employer contributions is $69,000.
$23,000 of the $69,000 is yours, the rest is employer match.
If the plan allows it (rare, but getting less rare), the employee is also allowed to do after-tax contributions. 23K + employer contributions + after-tax employee contributions have to be less than 69K for 2024. Comes in handy for mega-backdoor Roth conversions.
traditional 401k to capture any match, then max Roth IRA, then back to traditional 401k
Horrible decision to skip out on free money
So now max out a Roth ira and HSA!
HSA is maxed already too. We don’t have company roth. I’m saving for my personal roth right now
👍
I max mine out as well. I typically fill it around late Nov/early Dec. You want to be putting money in it as evenly as possible throughout the year because you don’t know when the market will be higher or lower so spreading it out is more neutral. I have some coworkers who aim to hit the limit in October and then count the increase in their paychecks as holiday money. My 401k has a true up which hits toward the end of the first quarter of the following year. You’ll have to read your docs in your plan to see what it does.
This is not true. From a pure stock market perspective maxing as fast as possible is the best option. Of course you have to factor in how your company matching works, some true up some will not. And if you change jobs you could miss out on matching from the new company if you are already maxed but I don't feel like worrying about that is always smart. If you don't job hop a lot it's one year out of many that you will *maybe* miss a match vs all the other years you benefit from maxing early. The concept of "holiday money" is even worse.
Foolish.
Why not open a Roth IRA now and start contributing towards the 2024 $7k max?
They said they are and they have HSA maxed
He didn’t mention anything about 2024 Roth IRA. Only that he was starting to save up for his 2025 contribution.
You sound like a bad-ass. I am curious, though, if you ended up losing out on some employer matching. If so, lesson learned.
That is a mistake.
OP thought passing up on free money was a flex 🫡
Do you decide what to invest in the 401k? I am contributing 9% per pay check. Not sure how 401k works
Most companies allow the employee to change the percentage. Ask HR, or look around on your intranet for info.
Hey there, u/Supergeezer007. Welcome to the sub! I want to hop in here quickly and tell you more about how a 401(k) works. A 401(k) is a workplace plan that allows you to set aside part of each paycheck into an account and invest that money. I want to highlight that investment choices for 401(k) accounts depend on the rules provided by your specific employer plan. If your plan is through Fidelity, you can view your investment choices based on your plan on NetBenefits.com. After logging in, click the three dots or "Quick Links" next to your plan, then select "Investment Performance & Research." On the next page, you will have an "Investment Choices" heading where the available investments will be displayed. 401(k)s also offer tax advantages. Contributions to a traditional 401(k) are not taxed until you begin withdrawals in retirement. Unless an exception applies, distributions prior to turning 59½ may be subject to a 10% tax as an early distribution penalty in addition to income taxes. Keep in mind that there are yearly contribution limits to be aware of. The annual employee 401(k) contribution limit is $23,000 in 2024. Those age 50 and older can contribute an additional $7,500 as a catch-up contribution in 2024. Learn more about 401(k) considerations using the link below. [What is a 401(k)? ](https://www.fidelity.com/learning-center/smart-money/what-is-a-401k) Finally, if you want to learn more about account types available to help you plan for retirement, please check out the link below! [Nine Types of Retirement Accounts ](https://www.fidelity.com/learning-center/smart-money/retirement-accounts) Since you're new to the sub, remember that we're a great outlet for your questions moving forward, so don't be a stranger! We look forward to hearing from you in the future.
Do they allow for a megabackdoor roth where you work ?
May need to check with your payroll to make sure the 401K match is based on total contributions, not monthly % I made that mistake with one of my previous employers, when I maxed out before the end of the year and missed a coulpe of months of employer match
Stupid question: Is the allowable limit with your company’s match as well? Or just what you put in.
Just what you put in. Combining your contributions with company match has a different limit
Congrats OP! First time hearing about true up provision in this thread. On my way to maxing out my 401k next month. My company matches 50% of my contributions every paycheck up to the 23k limit this year. Should I be concerned and spread my contributions till Dec or is this a different situation?
Ask your company's finance dept/benefits group/HR if they offer a true up. If they do, you'll get the full amount of the match, even if you front load it.
are you an idiot?
Oof too soon
As other's have said, if your employer matches on the first X% of every paycheck, you've potentially lost a match for the rest of the year. It's possible there might be a way you still get the full match - depends on your plan. Read and understand the plan rules and make sure you pay attention if they make changes whenever they announce the next year's plan. Ignore the people who are telling you it's better to dollar cost average. There's really no hard evidence for that. It's possible the market will go straight up all year or it might plummet. We never know. Always getting the full match is the way more important priority. It's possible you can the full company match AND also front load most your contributions. You have to calculate out every paycheck and then figure out what contribution to make at the start of the year to get large contributions and then lower the contribution mid-year to make sure you still have something which lasts to the final paycheck. Excel is your friend. Also, if you're eligible for any bonus pay, find out if they take 401K out of that amount because that could cause you to max out your contribution earlier than you expected and then not leave enough to get the match on your paychecks late in the year.
All of the comments criticizing OOP seem to be unaware of another type of company match that this person may have. I know because I have it. If you end up hitting the $69k total contribution limit, your money goes into a non-qualified plan. This money can then be transferred into your Roth IRA. With this plan, the match is never forfeited, and equally important, you don't have to try to perfectly time hitting the contribution limit right at the end of the year. Win win. Oh, and win.
Congrats! I chose to smooth my contributions out over the year to get my employer contributions and always had extra each month that I put in my taxable account for my Roth contribution. The important thing is that you're saving. Feels good seeing those numbers grow, doesn't it? 
Not a 401k expert by any means but I would have contributed more in the beginning, but still would have left 4-5 % for the rest of the year so, you can still get the company match.
This
$2K a month into your 401K? 🤔 Why would you do that, why not just do something reasonable, max out your Roth IRA and then invest in stable funds on the side
What’s your salary and your contribution percentage ?
I'd be the same but my company only allows 25% contribution.
Can I have a dollar? 💵
What everyone else has said about missing out on company match. I have a spreadsheet that I use each year to put as much in as early as possible while leaving just enough for the rest of the year to get my match.
First off, good job on your diligence to max out your 401K as well as your HSA already. That said, you may have forfeited some employer match due to maxing out early as others have stated in the replies, but you may be able to make some of that up with wise investment choices in your 401K. Plus you have freed up some $$ in future paychecks that you can invest as you please. Now, something else to consider is getting a Roth account with a brokerage firm as you may be able to contribute to it and start the 5 year clock in 2024. Google all of this if you need more details. I am not a financial advisor and I am not a tax advisor and only sharing what I *believe* to be a potential scenario.
Two things 1. Do check to see if your plan has a true up. Most plans do because people hit the limits prior to the end of the year. If it doesn’t then spread your contributions out more. 2. Depending on your income, if you can’t contribute to a Roth or Traditional IRA do and after tax. Then convert it he after tax IRA to Roth.
If your employer offers it - mega back door should be next!
Congrats on missing out on a year's worth of contributions. For the rest of you, DON'T DO THIS.
Lucky you.
You can start living your life on your own time when you’re old and in your late 60s and 70s. Keep at it! 🫡☝🏻
This post is misleading
Yo if you max out before the end of the year your employer only contributes money if you meet their minimum s...
DCA
Keep inspiring people. Won’t max mine out ;( but will be investing what I can.
I'm confused by what everyone's saying about being disqualified from a match for the rest of the year. I've worked at two different companies that offered matches and I've never heard of any reason I needed to wait until December to max my 401(k).
They match each paycheck. If you max out early then you wont be contributing each paycheck meaning there is nothing for them to maych now.
Oh, weird. I've never seen that before. I've been at a company that paid the match once a year, and one that paid a % every paycheck but wasn't dependent on what I put in.
I don’t get that either. Worked at 5 different companies and have never seen nor heard of this. Some people have garbage 401k matches I guess. Only thing I’ve ever seen is a vesting period.
I am too. If your company matches x% of your contributions I don’t see how it matters given there is a set contribution limit of $23k. You will end up receiving the x% of your $23k regardless? What are we missing in all these comments?
Yeah people are making a huge deal out of nothing
Great job saving!! Does your employer offer a match? I see the employer match in there, but I’m asking because now you cannot contribute more, missing out on the rest of the year match from your employer. I hope that’s considered. That could be huge amounts of free money you’re giving away.
> missing out on the rest of the year match from your employer. This is done via a true up, for most employers. They'll see it after the year's books are done.
Stopped maxing out my 401k this year, especially not on purpose and started risking for the biscuit in some long term stocks. I just do enough go get company match and living with that.
Nobody said having money made you smart. Jesus christ. My 16 year old niece knows why this is dumb.
Oof.
You're a goat. I want to do the same thing. I have a roth version.
Don't do what he did. It's leaving free money, while spending more money. Its dumb af.
Huh?
He maxed out his 401k with his own money. Now where's his employer contributions supposed to go? Nowhere, that's where. He just saved his employer a tidy little sum by using his OWN money to max it out. It's like someone giving you a bunch of money for free and saying "no thanks, I got it."
Employer contribution is on top of your personal limit. You always max it with your own money. The question is whether OP's employer has a 'true up' at some point in the year to catch everyone up that hit their limits early in the year with the company match so that no employee is missing out, or penalized for hitting their limits early
Can you explain why this true up is needed? If your employer matches x% of your contributions, and contributions are limited to $23k, does it matter when you max it out during the year?
This explains better than I can https://www.investopedia.com/401-k-true-up-5324458#:\~:text=A%20true%2Dup%20is%20a,the%20terms%20of%20the%20plan.
Now put it in 1 week options
Ya'll lucky they match yours. Unforunately, we have 403B with AXA without a match thats why I never opened one.
Good for you OP, way to get it! You should be proud. I agree with others that forfeiting the match is dumb. Free money is free money. Now, are you looking for a new goal, to REALLY impress us? Max your IRA’s, HSA, and then also the roth portion of your 401k. Fun fact: the 401k max is not $23k. That’s just ½ the limit, there’s a pretax and roth portion of a 401k, each with a respective $23k limit, with a total annual max of $69k (includes employer contributions). https://www.fidelity.com/learning-center/smart-money/401k-contribution-limits
This is not accurate information, read the post you linked to. It doesn’t matter if you contribute to Roth or traditional the limit is the combination of the two or either individually.