Let's review Employer Match - part III

In yesterday's post, we reviewed how Employer Match works in best scenario.

For some of you, there may be a requirement that you need to contribute in each of the paycheck to get an employer match in that month. What would mean is that if you don't contribute to 401k for a given pay check, there may not be any contribution by employer in that pay check.

This may occur if you try to allocate higher percentage to your 401k or if you try to "front-load" 401k in the months where you get higher income.

Scenario:

If you are earning $1,00,000, and contributing 20% a month to 401k, you will be putting in $833 a month. If your employer has 50% of employee match upto first 6%, it would mean that employer will add $125 a month.

For year 2015, max limit for a regular employee to contribute is $18000. As per the contribution table below, that limit will be reached by 11/30/2015, causing no contribution by employee in December 2015 and hence causing no contribution by employer as well. Essentially losing $250 of employer contribution.

Date	Paycheck	Employee contribution	Employer Match
1/15/2015	$4,166.67	$833.33	$125.00
1/31/2015	$4,166.67	$833.33	$125.00
2/15/2015	$4,166.67	$833.33	$125.00
2/28/2015	$4,166.67	$833.33	$125.00
3/15/2015	$4,166.67	$833.33	$125.00
3/31/2015	$4,166.67	$833.33	$125.00
4/15/2015	$4,166.67	$833.33	$125.00
4/30/2015	$4,166.67	$833.33	$125.00
5/15/2015	$4,166.67	$833.33	$125.00
5/31/2015	$4,166.67	$833.33	$125.00
6/15/2015	$4,166.67	$833.33	$125.00
6/30/2015	$4,166.67	$833.33	$125.00
7/15/2015	$4,166.67	$833.33	$125.00
7/31/2015	$4,166.67	$833.33	$125.00
8/15/2015	$4,166.67	$833.33	$125.00
8/31/2015	$4,166.67	$833.33	$125.00
9/15/2015	$4,166.66	$833.33	$125.00
9/30/2015	$4,166.66	$833.33	$125.00
10/15/2015	$4,166.66	$833.33	$125.00
10/31/2015	$4,166.66	$833.33	$125.00
11/15/2015	$4,166.66	$833.33	$125.00
11/30/2015	$4,166.66	$500	$125.00
12/15/2015	$4,166.66		$0.00
12/31/2015	$4,166.66		$0.00
Total	$100,000.00	$18,000.00	$2,750.00