The wording on the plan is likely something along the lines of:1. I feel like people should front load, in case they need to change employers that year.
2. If you front load, you get additional compounding time. Stocks went up more than 20% last year. Better to get that in early rather than later.
3. Seems like a corporate game to mess people up later in the year. Why is someone who contributes x each pay check more entitled to corporate matching that someone who does 2x than .5x or whatever it might be. It has no fairness coherence.
4. Point out that your plan doesn't say that the 4% has to be each paycheck, then I guess going forward, do the 4% thing each time. But this is all absurd shenanigans. The empathy for OP should be dialed up.
"The plan will match contributions $1:$1 up to 3% of salary and $1:$2 up to 5% of salary for a maximum match of 4%."
If you're not contributing, then there's nothing to match. It's implied.
I also think it's nothing nefarious. The vast, vast majority of people don't come anywhere near to maxing our their contributions. The number of people hit by this is vanishingly small. It's simply not something that gets considered when setting up the plan.
Changing it after the fact costs money. And then you have to add on additional processes to handle the true up. All for a minute number of people.
Look, I'm on my 401k committee and pushed us into a plan with transparent pricing to get low-cost index funds. Even I got bit by it.
Now, I know that I have to keep an eye on my contributions towards the last quarter.
Statistics: Posted by exodusNH — Sun Jan 05, 2025 11:48 am
