401k company match

[Like2Plan]

If you receive a company match from your 401k, how is it paid?
DH's company matches 4%. The company has a true-up at the end of the year if you reach your maximum contribution before the end of the year. The company pays the match quarterly. You have to be employed on the last day of the quarter in order to get the match for that quarter. The matching money drops into the account about 1 month after the quarter has closed out.

I wish it was paid at the same time the contribution was made, but it seems a lot of companies have adopted a round about way of paying the match. DH is seriously thinking about retiring () in the next few weeks and he is trying to time it so that he maximizes his match. (Probably in July).

[HundredK]

My husband's company makes the contribution right alongside our contribution with a true-up at year-end. So every pay period, both contributions go right into the account.

[Like2Plan]

My husband's company makes the contribution right alongside our contribution with a true-up at year-end. So every pay period, both contributions go right into the account.

I think your husband's company has the best system. About the only positive that I can think of to the way DH's company does it is that it allows DH to separate out the investments for pre tax company match (bonds) and the 401k Roth contributions (stocks). He just adjusts how new contributions are invested just before the company match is scheduled to drop in (it is usually a different day than the regular contributions) and then back to stocks the next day.

[terri77]

I work for the federal government. They match 5%, but it is per paycheck. In other words, if you max out your TSP early in the year, you miss out on matching contributions.

[kork13]

I'm in the military, and elected not to sacrifice 20% of my retirement pension (2.5% of my highest 3 years' annual base pay, starting the day I retire) in order to get up to 6% matching into my TSP for the then-remaining 9 years of my military career... Taking the match would have cut the pension to 2% of my high 3. For those that DO have the new retirement plan (it was mandatory for newer folks, and some of us could opt-in), it's paid in monthly, but there is no top-up to my understanding. That said... it's still a pretty sweet deal for those who are just joining the military -- they get a solid pension, but also a respectable match (plus occasional bonuses) for the TSP that remains portable.

It's unfortunate that many employers (much less the federal gov't) don't help folks out with a top-up. Seems like a relatively inexpensive way to give your employees an extra boost toward a successful retirement. But that may go back to the 'morality in capitalism' discussion.

[Like2Plan]

I'm in the military, and elected not to sacrifice 20% of my retirement pension (2.5% of my highest 3 years' annual base pay, starting the day I retire) in order to get up to 6% matching into my TSP for the then-remaining 9 years of my military career... Taking the match would have cut the pension to 2% of my high 3. For those that DO have the new retirement plan (it was mandatory for newer folks, and some of us could opt-in), it's paid in monthly, but there is no top-up to my understanding. That said... it's still a pretty sweet deal for those who are just joining the military -- they get a solid pension, but also a respectable match (plus occasional bonuses) for the TSP that remains portable.

It's unfortunate that many employers (much less the federal gov't) don't help folks out with a top-up. Seems like a relatively inexpensive way to give your employees an extra boost toward a successful retirement. But that may go back to the 'morality in capitalism' discussion.

Kork13,
Is a top-up the same as a true-up at the end of the year or is it an extra match up to a certain level?

I am really torn regarding the military pension. I think the old retirement system is more generous. Or, is it? There is a discussion on the Boglehead board about how to maximize the new system which makes it seem pretty good. With the old retirement system, you have a 20 year cliff vest which is all or nothing. But, most folks (I saw an 83% quoted in an article) don't stay in for 20 years. The argument is that folks leaving before 20 would get more benefit from the new blended retirement system. But, I think success in the new blended retirement system relies pretty heavily on participation (individual contributions) into the system. I am pretty confident that someone like you would do well. But, I wonder how the average participant is going to fare. Behind all the sweeteners (matches and bonuses) and smoke and mirrors, though--I believe the main reason they put the new blended retirement system in place was to save money. Personally, I would have liked to see the match put in place to encourage contributions plus the old retirement system (Obviously, I'm not in charge of the budget. )

[disneysteve]

If you receive a company match from your 401k, how is it paid?

It's paid at the same time as my contributions, every 2 weeks.

[Like2Plan]

It's paid at the same time as my contributions, every 2 weeks.

I definitely like the way your company does it.
I wonder how many companies have the wonky procedures similar to DH's company for paying the match. I wonder if it saves the company lots of money--folks leaving before the end of the quarter miss out on the match for that quarter. I've read that IBM is even worse--you have to be employed Dec 31st in order to receive the match for that year. https://www.consumerismcommentary.co...-401k-benefit/

[kork13]

Kork13,
Is a top-up the same as a true-up at the end of the year or is it an extra match up to a certain level?

I am really torn regarding the military pension. I think the old retirement system is more generous. Or, is it? There is a discussion on the Boglehead board about how to maximize the new system which makes it seem pretty good. With the old retirement system, you have a 20 year cliff vest which is all or nothing. But, most folks (I saw an 83% quoted in an article) don't stay in for 20 years. The argument is that folks leaving before 20 would get more benefit from the new blended retirement system. But, I think success in the new blended retirement system relies pretty heavily on participation (individual contributions) into the system. I am pretty confident that someone like you would do well. But, I wonder how the average participant is going to fare. Behind all the sweeteners (matches and bonuses) and smoke and mirrors, though--I believe the main reason they put the new blended retirement system in place was to save money. Personally, I would have liked to see the match put in place to encourage contributions plus the old retirement system (Obviously, I'm not in charge of the budget. )

Yes, by "top-up" I meant "true-up" ... never had it, so I'm probably using the wrong terms.

For younger folks (especially those just entering military service today), the new blended retirement system (TSP contributions + TSP match + career retention bonuses + 2% pension) is DEFINITELY a great recipe for success. It was only for those of us with ~10 years or less remaining before retirement that the BRS wasn't going to end up in our favor. However, the BRS is also cheaper for the military's budget, because it reduces the total pension & match expenditures over time, and allows the market to work in our favor. I honestly think that it was a great move, partly because it does give individuals some portability if they leave the military before retirement (which as stated, many/most do).

While you definitely have a valid concern about making sure that everyone can be successful with it, it's honestly not hard to do so. The TSP only has 5x MF options, plus 5 target-date options. The TSP board manages them very well, and most people can (and do) just get a smattering of the various options, and do just fine with it. Not amazing, but more than sufficient to be successful. And many leaders at all ranks (myself included) often encourage folks to contribute at least up to the match they're now receiving.

[jenn_jenn]

I have never heard of quarterly true ups. That’s interesting.

My current company matches up to 6% of your salary + bonus and they do it right along side your contributions. My husband’s company does 5% the same way

[Like2Plan]

I have never heard of quarterly true ups. That’s interesting.

My current company matches up to 6% of your salary + bonus and they do it right along side your contributions. My husband’s company does 5% the same way

Actually the match is paid quarterly. (The true up is at the end of the year in case you max out your contributions prior to the end of the year. )

That is a pretty nice match you are getting.

[srblanco7]

3% match with an annual true-up as well as a 2% contribution by the Company (in Q1 of the subsequent year) based on the prior year total comp. The 2% contribution is regardless of whether or not you contributed to the 401k plan.

[Like2Plan]

3% match with an annual true-up as well as a 2% contribution by the Company (in Q1 of the subsequent year) based on the prior year total comp. The 2% contribution is regardless of whether or not you contributed to the 401k plan.

I like the 2% contribution (whether or not you contribute to the plan). Do you have to be employed on Dec 31st in order to get it? Does that qualify your plan as a safe harbor?

[srblanco7]

I like the 2% contribution (whether or not you contribute to the plan). Do you have to be employed on Dec 31st in order to get it? Does that qualify your plan as a safe harbor?

The 2% contribution is relatively new, and I’m a fan. We were working on integrating two US 401k plans as a result of an acquisition, and it seemed a reasonable compromise. Don’t believe that it qualifies as safe harbor, as I recollect there was a vesting period. And yes, Dec 31 employment was required.

[LivingAlmostLarge]

I think DH wAS quarterly with end of year true up