Thursday, December 19, 2013

401(k) Math

Did you know that if you fund your 401(k) too quickly, you may risk losing some of the company match? It may sound like a good idea to get your maximum 401(k) contribution in early in the year to make sure you don’t miss out on the opportunity but if you max out your contribution before the end of the year, your employer will stop matching your contribution because there is nothing to match. Hit your max in June and your employer will only match for half the year. If they are matching 5%, it means you will really only get 2.5%. I know, it’s a math thing and so many people hate math things, but you could lose thousands of dollars in free money for doing 1 minute worth of math. Are you interested in the math now?