“Never Count Your Money At The Table”: But Check That 401(k) Match Once You Go Home.

Since we are all doing our taxes and have our W2’s in hand, let’s take a closer look at your 401(k) match.  Did you really get all that you were entitled to?  Multiply your annual compensation by your companies safe harbor match and see if the numbers come out right.  Here is an example:

  • You make $120,000 (there are limits if you make more than $250,000) per year or $10,000 per month.
  • You put 25% or $2500 each month into your companies 401(k) account.
  • The company matches you dollar for dollar up to 4% of your pay.  This amounts to $400 per month or 4% of $10,000.
  • After 7 months your HR department tells you that you have maxed out the amount the government allows you to contribute to your 401(k). In 2012 you could contribute $17,000, so after hitting that limit you stop contributing to the 401(k) for the rest of the year.
  • The company has put in a safe harbor match of $2800 for you during those 7 months.

Here is the issue:  You were entitled to a company match of $4800 ($120,000 compensation x 4% safe harbor match) but you only received $2800.  This is a common problem for those who max out early in the year, start and stop contributions or get paid a big bonus.  Depending on what your 401(k) plan document says and what your companies 401(k) record-keeper will do, you can ask them to perform a yearly “true up” to correct the difference.

Kenny Rogers is right.  It’s never polite to count your money at the table.  But you better count it when you get home!