If your employer offers a match, make sure you’re getting all you’re entitled to.

Are you contributing the maximum to your workplace retirement plan? And does your employer match your contributions?

If you answered yes to both questions, you need to be careful about how much money you place into your account each month. Getting it wrong could cause you to lose some of your employer’s contributions.

You see, once you’ve contributed the maximum to your employer’s retirement plan (the 2020 IRS limit is $19,500, with an additional $6,500 catch up for those age 50 and older), you can’t contribute any more. If you hit that limit in, say, September, you can’t contribute to the plan in the final three months of the year. And here’s the problem: Many employers match only if you contribute. If you don’t put in money in October, neither will your employer.

Some employers “true-up” their matches at the end of the year, to protect workers in this situation. But more than half don’t. So check with your HR department to see if your employer offers the true-up. If it doesn’t, you should ask HR to spread your paycheck deductions evenly throughout the year, so you don’t inadvertently miss any of your employer’s matching contributions. And be sure to talk with your Edelman Financial Engines advisor to make sure your retirement plan contributions are on target for your situation.

Copied from the Edelman Financial Engines newsletter of July, 2020

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