Case in point… contributing too much to your 401(k) or similar retirement plan too early in the year may be hazardous to your retirement-savings health! Many people believe that, as long as they contribute “enough” into the plan, they will receive the maximum employer matching contribution. The key problem is that while plans can handle the calculation and mechanics of matching contributions in different ways, many plans calculate those matching contributions on a per-pay-period basis. Put differently, John’s zeal to fund his account as early as possible cost him $12,250 in missed “free money” employer matching contributions. Thus, in such situations, it’s critical to ensure that you take proper planning to avoid the unwanted loss of matching contributions.

Source: Forbes February 13, 2019 16:18 UTC