Are you making the most of the employer match in your 401k plan? Getting the full employer match in your retirement plan is one of the closest things to free money in our economy. Forbes recently ran an article titled “The Big 401(k) Match Mistake,” that highlighted an easy to miss provision in many retirement plans that can prevent high income earners from receiving the full match on their retirement contributions. This can happen when plan contributions are “front-loaded” in the first few months of the year due to a high percentage contribution coupled with bonus income that causes you to hit the contribution limit early.
In theory this sounds like a great plan-max out your retirement plan early in the year, than you don’t have to worry about it until next year. The problem occurs if your plan matches your contribution each pay period; this can leave substantial dollars out of your account vs. extending the contributions throughout the entire year.
Now is a great time to check your plan provisions to make sure you are getting the most out of your employer match, before spring bonuses are paid. While you’re at it, make sure you are contributing as much as possible; the limit for 2012 is $17,000.
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