{"id":1123637,"date":"2019-06-27T19:37:24","date_gmt":"2019-06-27T19:37:24","guid":{"rendered":"https:\/\/dailyreckoning.com\/?p=107569"},"modified":"2019-06-27T19:37:24","modified_gmt":"2019-06-27T19:37:24","slug":"how-to-maximize-your-401k","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=1123637","title":{"rendered":"How to Maximize Your 401(K)"},"content":{"rendered":"

This post How to Maximize Your 401(K)<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n

Does your employer offer a 401(k) plan? And do they match any of your contributions? <\/span><\/p>\n

If so, they might only match up to that percentage on each of your checks, and not on how that check amount relates to your total annual salary.\u00a0<\/span><\/p>\n

That means deferring too much, too soon of your salary could reduce the amount of those matching contributions. <\/span><\/p>\n

Here\u2019s an example of how that could happen:<\/span><\/p>\n

In 2019, you can contribute up to $19,000 of your salary to a 401(k) plus another $6,000 if you are 50 or older for a potential total of $25,000. <\/span><\/p>\n

Suppose you are 60, just got a fat bonus from last year or maybe your spouse started a new job that includes a hefty pay increase. <\/span><\/p>\n

Now you have cash to spare and decide to max out your tax-deductible contributions to your 401(k) within the first six months of the year. Then you\u2019ll have the remaining six months to sock away money for a nice vacation over the holidays. <\/span><\/p>\n

Let\u2019s assume your salary is $75,000 and you are paid twice a month ($3,125). To reach your goal of front-loading your 401(k) by June 30, you\u2019ll have to contribute $2,083 per pay period ($25,000 \u00f7 12).\u00a0<\/span><\/p>\n

And say your employer matches the first 6% of your salary that you contribute each pay period to your retirement plan. That comes to $187.50 ($3,125 x 6%). <\/span><\/p>\n

Therefore, for the six months you contributed to the plan, your employer put in $2,250. <\/span><\/p>\n

So far so good. Except for this\u2026<\/span><\/p>\n

You\u2019ll Miss Out on More Free Money!<\/b><\/span><\/h2>\n

The remaining six months of the year you aren\u2019t contributing to your 401(k), which was your goal. But neither is your employer. <\/span><\/p>\n

Gone is the free money\u2026 $2,250 to be exact. <\/span><\/p>\n

Over many years that can add up, especially when you figure the returns you might earn on those matches.\u00a0<\/span><\/p>\n

However,<\/span><\/p>\n

You Might Be in Luck\u2026<\/b><\/span><\/h2>\n

Your 401(k) could have a true-up match. <\/span><\/p>\n

This optional feature allows you to receive the maximum employer match even if you\u2019ve reached the maximum deferral amount prior to the end of the year. <\/span><\/p>\n

In other words, an employer-sponsored retirement plan that has the true-match arrangement doesn\u2019t care when you hit the annual cap. <\/span><\/p>\n

When Front-Loading Could Make Sense<\/b><\/span><\/h2>\n

Without an employer match, front-loading your 401(k) is worth considering since your money will have the opportunity to benefit faster from compounded, tax-free growth. <\/span><\/p>\n

It could also make sense if you are retiring, as this will be the last opportunity to put away more tax-favored money for your golden years. <\/span><\/p>\n

And even if you are going to another job that has a retirement plan, there might be a waiting period at your new employer before you can participate.\u00a0<\/span><\/p>\n

Don\u2019t Be Too Eager To Fill Up That 401(K) Bucket Early In The Year <\/b><\/span><\/h2>\n

As you can see, there\u2019s no absolute right or wrong answer on whether front-loading is the right choice for you. <\/span><\/p>\n

Before you do it though, first check with your HR department. <\/span><\/p>\n

Ask:<\/span><\/p>\n

    \n
  1. What is the match formula?<\/span><\/li>\n
  2. How often are matches made\u2026 per pay period, monthly, quarterly, or annually?<\/span><\/li>\n
  3. Is there a true-up provision? <\/span><\/li>\n<\/ol>\n

    Then run the calculations. <\/span><\/p>\n

    If you find that you\u2019re going to fall into a deferring-too-much-too-fast trap that will cost you down the road, simply cut back on the amount you are deferring so it\u2019s spread throughout the year.<\/span><\/p>\n

    To a richer life,<\/p>\n

    \"Nilus<\/p>\n

    \u2014 Nilus Mattive
    \nEditor, The Rich Life Roadmap<\/i><\/p>\n

    The post How to Maximize Your 401(K)<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

    This post How to Maximize Your 401(K)<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n

    This issue details how to maximize your 401(k), and whether these strategies are the right fit for your retirement plans.<\/p>\n

    The post How to Maximize Your 401(K)<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n","protected":false},"author":55,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[2372,2103,366,2915,2935,1747,2936,923],"tags":[],"_links":{"self":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1123637"}],"collection":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/users\/55"}],"replies":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1123637"}],"version-history":[{"count":1,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1123637\/revisions"}],"predecessor-version":[{"id":1123638,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1123637\/revisions\/1123638"}],"wp:attachment":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1123637"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1123637"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1123637"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}