[SOLVED] How does my employer figure the 401k match?

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Topic Author
passive101
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[SOLVED] How does my employer figure the 401k match?

Post by passive101 »

My employer is supposed to do a 4% match @ 100% in the 401k. For the whole year I contributed $16,390.97. Gross earnings are $74,035.86. The company contributed $1445.19

How did they come up with the $1445? I thought they would put in 4% of my annual income?



I am paid a combination of hourly, commission, and tips (If that matters)

Hourly = 15,075.18
Overtime = 651.40
Commission = 27,568.52
Tips = 28,602.47
PTO = 213.84

I SOLVED THE MYSTERY!

Thank you everyone for helping me narrow down what I was missing. Some of you were right I think. I completely missed this. They put 1/2 of the match in cash and 1/2 of the match in company stock. I don’t know where the cash is in the account, but I was looking through the contributions. On 3/6 and 3/10 of this year their are 2 contributions. The totals are $1480.72 & $1480.71 These 2 together equal $2961.43 which is exactly 4% of my total gross earnings of $74,035.86

Maybe the cash just goes into the Vanguard S&P 500 fund that I have chosen for my investment here. I’m not certain. I’m now also more confused by reading the 401k rules that say tips aren’t figured into the 401k match, but I guess they must be :confused
Last edited by passive101 on Tue Mar 28, 2023 3:26 am, edited 4 times in total.
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Beachey
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Re: How does my employer figure the 401k match?

Post by Beachey »

Did you make those contributions evenly over every paycheck or did you contribute on only some paychecks? Your match is not clear but typically the match is only applied on paychecks where you contribute a minimum amount? Some employers will do a yearly 'true-up" once a year to account for uneven contributions but this is at employer discretion.
Topic Author
passive101
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Re: How does my employer figure the 401k match?

Post by passive101 »

Beachey wrote: Sun Mar 26, 2023 12:20 am Did you make those contributions evenly over every paycheck or did you contribute on only some paychecks? Your match is not clear but typically the match is only applied on paychecks where you contribute a minimum amount? Some employers will do a yearly 'true-up" once a year to account for uneven contributions but this is at employer discretion.
Yup, they only put money in from last year in a lump some the following year. I did talk to the 401k company once before and they said it didn’t matter when you contributed. I was worried that I might go over the max (but I fell short of that because business was slower some months).
HomeStretch
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Re: How does my employer figure the 401k match?

Post by HomeStretch »

Have you read the match language in your 401k plan document? Matching contribution % may not apply to income from tips and commissions.
Topic Author
passive101
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Re: How does my employer figure the 401k match?

Post by passive101 »

HomeStretch wrote: Sun Mar 26, 2023 2:35 am Have you read the match language in your 401k plan document? Matching contribution % may not apply to income from tips and commissions.
It doesn’t distinguish between anything about tips and commission that I can find.
lazybones18
Posts: 136
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Re: How does my employer figure the 401k match?

Post by lazybones18 »

"Yup, they only put money in from last year in a lump some the following year."

what do you mean by this ?
employer contributed for year 2022 in the year of 2023 ? I have never heard of this

usually they should match 4% of your every weekly paycheck.

e.g. your weekly paycheck is $2,000. You contribute $80. Employer should contribute/match $80 in the same weekly pay period
Topic Author
passive101
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Re: How does my employer figure the 401k match?

Post by passive101 »

lazybones18 wrote: Sun Mar 26, 2023 11:16 pm "Yup, they only put money in from last year in a lump some the following year."

what do you mean by this ?
employer contributed for year 2022 in the year of 2023 ? I have never heard of this

usually they should match 4% of your every weekly paycheck.

e.g. your weekly paycheck is $2,000. You contribute $80. Employer should contribute/match $80 in the same weekly pay period
Yup. They only contribute 1x for last year in the following year. I’ve worked for a factory that did the same thing. They do it, because if you quite or get fired before that date they don’t have to pay you anything and you forfeit it.
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DeliberateDonkey
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Re: How does my employer figure the 401k match?

Post by DeliberateDonkey »

You'll need to take a look at the plan documents to find out exactly what the 4% is of/up to. If you have access to manage your 401(k) online, chances are good that the documents are available through that same website.

Did you start in the middle of the year? It's not immediately clear from the numbers you posted, but it's possible there is some proration going on.
Topic Author
passive101
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Re: How does my employer figure the 401k match?

Post by passive101 »

DeliberateDonkey wrote: Sun Mar 26, 2023 11:35 pm You'll need to take a look at the plan documents to find out what the 4% is of exactly. If you have access to manage your 401(k) online, chances are good that the documents are available through that same website.

Did you start in the middle of the year? It's not immediately clear from the numbers you posted, but it's possible there is some proration going on.
Nope. I've worked there full time for over 3 years.
twh
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Re: How does my employer figure the 401k match?

Post by twh »

The lump sum thing is called a "true up contribution". That's typically where they catch up on the non-recurring items that may not have been accounted for along the way. That should have hit by now and you need to dig into it.
Hyperchicken
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Re: How does my employer figure the 401k match?

Post by Hyperchicken »

You may need to go pay check by pay check, and see where your match is below 4% of your gross pay check amount.
Topic Author
passive101
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Re: How does my employer figure the 401k match?

Post by passive101 »

Hyperchicken wrote: Sun Mar 26, 2023 11:52 pm You may need to go pay check by pay check, and see where your match is below 4% of your gross pay check amount.
The only way I can see what they put in for the match is looking at the 401k website.
Hyperchicken
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Re: How does my employer figure the 401k match?

Post by Hyperchicken »

passive101 wrote: Sun Mar 26, 2023 11:53 pm
Hyperchicken wrote: Sun Mar 26, 2023 11:52 pm You may need to go pay check by pay check, and see where your match is below 4% of your gross pay check amount.
The only way I can see what they put in for the match is looking at the 401k website.
You keep shooting down every suggestion your are given. It's your money. Figure it out.
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passive101
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Re: How does my employer figure the 401k match?

Post by passive101 »

Hyperchicken wrote: Sun Mar 26, 2023 11:55 pm
passive101 wrote: Sun Mar 26, 2023 11:53 pm
Hyperchicken wrote: Sun Mar 26, 2023 11:52 pm You may need to go pay check by pay check, and see where your match is below 4% of your gross pay check amount.
The only way I can see what they put in for the match is looking at the 401k website.
You keep shooting down every suggestion your are given. It's your money. Figure it out.
I'm just saying that it never shows on a paycheck what they contribute, but I can see it on the 401k website. Maybe I can try talking to corporate or something about it. Our management doesn't know anything about these issues and when their are problems can take a long time to figure it out. The company I work for is owned by another company.
tesuzuki2002
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Re: How does my employer figure the 401k match

Post by tesuzuki2002 »

Did you ever contribute less than 4%?

Should be very easy to reconcile the transactions on the 401k website.

Did you review your 2021 statements for comparison?
twh
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Re: How does my employer figure the 401k match?

Post by twh »

Seems strange your paycheck doesn't have all the itemizations.
Topic Author
passive101
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Re: How does my employer figure the 401k match

Post by passive101 »

tesuzuki2002 wrote: Mon Mar 27, 2023 12:42 am Did you ever contribute less than 4%?

Should be very easy to reconcile the transactions on the 401k website.

Did you review your 2021 statements for comparison?
I made sure to always contribute more then the 4% and set it to automatically contribute every paycheck.

Maybe I'll have to try talking to them about it. I don't think they would try to rip me off because they seem like good people.
Topic Author
passive101
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Re: How does my employer figure the 401k match?

Post by passive101 »

twh wrote: Mon Mar 27, 2023 12:43 am Seems strange your paycheck doesn't have all the itemizations.
Yeah. There are sometimes I I've noticed that they don't show my PTO or overtime break down, but the gross amount that I'm paid seems to be correct. I think sometimes they just forget to list everything on there.

Maybe I can ask them if they can give me a copy with everything broken down? Sometimes there are things like a $20 incentive bonus and stuff for doing extra things or staying to work extra to help out in a different department but earning a little less per hour.
erp
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Re: How does my employer figure the 401k match?

Post by erp »

Hyperchicken wrote: Sun Mar 26, 2023 11:55 pm
passive101 wrote: Sun Mar 26, 2023 11:53 pm
Hyperchicken wrote: Sun Mar 26, 2023 11:52 pm You may need to go pay check by pay check, and see where your match is below 4% of your gross pay check amount.
The only way I can see what they put in for the match is looking at the 401k website.
You keep shooting down every suggestion your are given. It's your money. Figure it out.
It sounds like there's only 1 lump match so this wouldn't work. (if you're talking about OP's own contributions being below 4%, then you have a typo in your original suggestion which is probably the confusion)

OP, has the 4% match always been correct in previous years? Were you paid in different categories before too? But there's no subset of those categories that add up to 36k, so it doesn't seem like that's the problem.

btw your categories add up to about 72k instead of 74k. Also 1445 is exactly 2% of the 72k - I don't know if that's just a coincidence or a clue.
dcabler
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Location: TX

Re: How does my employer figure the 401k match?

Post by dcabler »

Beachey wrote: Sun Mar 26, 2023 12:20 am Did you make those contributions evenly over every paycheck or did you contribute on only some paychecks? Your match is not clear but typically the match is only applied on paychecks where you contribute a minimum amount? Some employers will do a yearly 'true-up" once a year to account for uneven contributions but this is at employer discretion.
I've been doing this for years. I front-load my 401K such that I've maxed out my annual contributions by the end of the first quarter. And that means that I max out my contributions before my employer maxes out its matching. I then get a true up the following June which makes me whole. I guess you can say it's at the employer discretion but it's codified in our plan documents. It's not like they decide every year whether to do a true-up or not. Of course they can always change the plan. :D

I did have a previous employer that did true-ups but their plan required that you still be employed to receive the true-up. Annoying. Not the case with my current employer. Good thing because I'm retiring shortly and the only reason I'll keep my 401K open at all is to get that last true up next year.

Anyway, the reason I front load (and live on tiny paychecks for a few months) is that my industry is well known for frequent layoffs and they typically happen in the second half of the year.

Cheers
PghPharmBoy
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Re: How does my employer figure the 401k match?

Post by PghPharmBoy »

passive101 wrote: Sun Mar 26, 2023 11:17 pm
lazybones18 wrote: Sun Mar 26, 2023 11:16 pm "Yup, they only put money in from last year in a lump some the following year."

what do you mean by this ?
employer contributed for year 2022 in the year of 2023 ? I have never heard of this

usually they should match 4% of your every weekly paycheck.

e.g. your weekly paycheck is $2,000. You contribute $80. Employer should contribute/match $80 in the same weekly pay period
Yup. They only contribute 1x for last year in the following year. I’ve worked for a factory that did the same thing. They do it, because if you quite or get fired before that date they don’t have to pay you anything and you forfeit it.
OP - I’ve worked for a company that did this. The match was provided in one lump sum in March of the following year. There was never any accounting for it anywhere - it just appeared in the 401(k) on a certain date.

What worked for me to verify the match # probably won’t work for you, based on your other posts. (What I would do is add up my salary and bonus and apply the match % and it usually worked out to a very similar number as the match amount)

What you could do is take a look at your W-2 for 2022. If you have a line item in box 12 marked with a “D” that is the total amount you’ve deferred into the 401k for the year (according to your employer).

If that amount x 4% doesn’t equal the match amount, call your payroll department. The 401k people don’t really have enough insight into why your employer does what they do.

Best of luck and let us know if you get a resolution! :beer
Topic Author
passive101
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Re: How does my employer figure the 401k match?

Post by passive101 »

PghPharmBoy wrote: Mon Mar 27, 2023 6:39 am
passive101 wrote: Sun Mar 26, 2023 11:17 pm
lazybones18 wrote: Sun Mar 26, 2023 11:16 pm "Yup, they only put money in from last year in a lump some the following year."

what do you mean by this ?
employer contributed for year 2022 in the year of 2023 ? I have never heard of this

usually they should match 4% of your every weekly paycheck.

e.g. your weekly paycheck is $2,000. You contribute $80. Employer should contribute/match $80 in the same weekly pay period
Yup. They only contribute 1x for last year in the following year. I’ve worked for a factory that did the same thing. They do it, because if you quite or get fired before that date they don’t have to pay you anything and you forfeit it.
OP - I’ve worked for a company that did this. The match was provided in one lump sum in March of the following year. There was never any accounting for it anywhere - it just appeared in the 401(k) on a certain date.

What worked for me to verify the match # probably won’t work for you, based on your other posts. (What I would do is add up my salary and bonus and apply the match % and it usually worked out to a very similar number as the match amount)

What you could do is take a look at your W-2 for 2022. If you have a line item in box 12 marked with a “D” that is the total amount you’ve deferred into the 401k for the year (according to your employer).

If that amount x 4% doesn’t equal the match amount, call your payroll department. The 401k people don’t really have enough insight into why your employer does what they do.

Best of luck and let us know if you get a resolution! :beer

On my W2 I have
12a AA- $16,390.97
12b DD - $4,962.36
12c and 12d are blank

Is the match supposed to be 4% of what I contributed or what I earned for the year?
MrJedi
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Re: How does my employer figure the 401k match?

Post by MrJedi »

I've never seen employer contributions on my paycheck. I have to go online and see itemized transactions there.

Are you sure you're not getting employer contributions along the way and this is just the true up contribution? You'll need to go look at itemized transactions last year in your 401k.
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Wiggums
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Re: How does my employer figure the 401k match?

Post by Wiggums »

W2 box 12 code AA for Roth contributions.

Code DD and the amount of your employer-sponsored health coverage plan.

I would check with the payroll department about the calculation.

Aldo ask if they will credit the match after you retire (assuming that the 401k is left in place.
"I started with nothing and I still have most of it left."
dcabler
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Re: How does my employer figure the 401k match?

Post by dcabler »

MrJedi wrote: Mon Mar 27, 2023 6:56 am I've never seen employer contributions on my paycheck. I have to go online and see itemized transactions there.

Are you sure you're not getting employer contributions along the way and this is just the true up contribution? You'll need to go look at itemized transactions last year in your 401k.
Excellent point! Same here - have to log into my 401K account to actually see those.

Cheers.
runner540
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Re: How does my employer figure the 401k match?

Post by runner540 »

passive101 wrote: Mon Mar 27, 2023 6:47 am
PghPharmBoy wrote: Mon Mar 27, 2023 6:39 am
passive101 wrote: Sun Mar 26, 2023 11:17 pm
lazybones18 wrote: Sun Mar 26, 2023 11:16 pm "Yup, they only put money in from last year in a lump some the following year."

what do you mean by this ?
employer contributed for year 2022 in the year of 2023 ? I have never heard of this

usually they should match 4% of your every weekly paycheck.

e.g. your weekly paycheck is $2,000. You contribute $80. Employer should contribute/match $80 in the same weekly pay period
Yup. They only contribute 1x for last year in the following year. I’ve worked for a factory that did the same thing. They do it, because if you quite or get fired before that date they don’t have to pay you anything and you forfeit it.
OP - I’ve worked for a company that did this. The match was provided in one lump sum in March of the following year. There was never any accounting for it anywhere - it just appeared in the 401(k) on a certain date.

What worked for me to verify the match # probably won’t work for you, based on your other posts. (What I would do is add up my salary and bonus and apply the match % and it usually worked out to a very similar number as the match amount)

What you could do is take a look at your W-2 for 2022. If you have a line item in box 12 marked with a “D” that is the total amount you’ve deferred into the 401k for the year (according to your employer).

If that amount x 4% doesn’t equal the match amount, call your payroll department. The 401k people don’t really have enough insight into why your employer does what they do.

Best of luck and let us know if you get a resolution! :beer

On my W2 I have
12a AA- $16,390.97
12b DD - $4,962.36
12c and 12d are blank

Is the match supposed to be 4% of what I contributed or what I earned for the year?
I read it as: lesser of 4% of eligible compensation or 100% of your contributions
It’s not clear to me if you’re comparing apples to apples: match for 2022 made in 2023, to 2022!income?
Topic Author
passive101
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Joined: Tue May 05, 2020 2:47 pm

Re: How does my employer figure the 401k match?

Post by passive101 »

runner540 wrote: Mon Mar 27, 2023 7:37 am
passive101 wrote: Mon Mar 27, 2023 6:47 am
PghPharmBoy wrote: Mon Mar 27, 2023 6:39 am
passive101 wrote: Sun Mar 26, 2023 11:17 pm
lazybones18 wrote: Sun Mar 26, 2023 11:16 pm "Yup, they only put money in from last year in a lump some the following year."

what do you mean by this ?
employer contributed for year 2022 in the year of 2023 ? I have never heard of this

usually they should match 4% of your every weekly paycheck.

e.g. your weekly paycheck is $2,000. You contribute $80. Employer should contribute/match $80 in the same weekly pay period
Yup. They only contribute 1x for last year in the following year. I’ve worked for a factory that did the same thing. They do it, because if you quite or get fired before that date they don’t have to pay you anything and you forfeit it.
OP - I’ve worked for a company that did this. The match was provided in one lump sum in March of the following year. There was never any accounting for it anywhere - it just appeared in the 401(k) on a certain date.

What worked for me to verify the match # probably won’t work for you, based on your other posts. (What I would do is add up my salary and bonus and apply the match % and it usually worked out to a very similar number as the match amount)

What you could do is take a look at your W-2 for 2022. If you have a line item in box 12 marked with a “D” that is the total amount you’ve deferred into the 401k for the year (according to your employer).

If that amount x 4% doesn’t equal the match amount, call your payroll department. The 401k people don’t really have enough insight into why your employer does what they do.

Best of luck and let us know if you get a resolution! :beer

On my W2 I have
12a AA- $16,390.97
12b DD - $4,962.36
12c and 12d are blank

Is the match supposed to be 4% of what I contributed or what I earned for the year?
I read it as: lesser of 4% of eligible compensation or 100% of your contributions
It’s not clear to me if you’re comparing apples to apples: match for 2022 made in 2023, to 2022!income?
I'm only looking at my paychecks and W2 from 2022 and the match from 2022
MrJedi
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Re: How does my employer figure the 401k match?

Post by MrJedi »

passive101 wrote: Mon Mar 27, 2023 7:58 am
runner540 wrote: Mon Mar 27, 2023 7:37 am
passive101 wrote: Mon Mar 27, 2023 6:47 am
PghPharmBoy wrote: Mon Mar 27, 2023 6:39 am
passive101 wrote: Sun Mar 26, 2023 11:17 pm

Yup. They only contribute 1x for last year in the following year. I’ve worked for a factory that did the same thing. They do it, because if you quite or get fired before that date they don’t have to pay you anything and you forfeit it.
OP - I’ve worked for a company that did this. The match was provided in one lump sum in March of the following year. There was never any accounting for it anywhere - it just appeared in the 401(k) on a certain date.

What worked for me to verify the match # probably won’t work for you, based on your other posts. (What I would do is add up my salary and bonus and apply the match % and it usually worked out to a very similar number as the match amount)

What you could do is take a look at your W-2 for 2022. If you have a line item in box 12 marked with a “D” that is the total amount you’ve deferred into the 401k for the year (according to your employer).

If that amount x 4% doesn’t equal the match amount, call your payroll department. The 401k people don’t really have enough insight into why your employer does what they do.

Best of luck and let us know if you get a resolution! :beer

On my W2 I have
12a AA- $16,390.97
12b DD - $4,962.36
12c and 12d are blank

Is the match supposed to be 4% of what I contributed or what I earned for the year?
I read it as: lesser of 4% of eligible compensation or 100% of your contributions
It’s not clear to me if you’re comparing apples to apples: match for 2022 made in 2023, to 2022!income?
I'm only looking at my paychecks and W2 from 2022 and the match from 2022
How are you looking up 2022 match?

Have you looked at all itemized transactions from 2022 in your 401k? Often there are matching contributions all along the way and true up is just an extra one to catch up if you front loaded some of your contributions and didn't maintain the full year.
Topic Author
passive101
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Re: How does my employer figure the 401k match?

Post by passive101 »

MrJedi wrote: Mon Mar 27, 2023 8:23 am
passive101 wrote: Mon Mar 27, 2023 7:58 am
runner540 wrote: Mon Mar 27, 2023 7:37 am
passive101 wrote: Mon Mar 27, 2023 6:47 am
PghPharmBoy wrote: Mon Mar 27, 2023 6:39 am

OP - I’ve worked for a company that did this. The match was provided in one lump sum in March of the following year. There was never any accounting for it anywhere - it just appeared in the 401(k) on a certain date.

What worked for me to verify the match # probably won’t work for you, based on your other posts. (What I would do is add up my salary and bonus and apply the match % and it usually worked out to a very similar number as the match amount)

What you could do is take a look at your W-2 for 2022. If you have a line item in box 12 marked with a “D” that is the total amount you’ve deferred into the 401k for the year (according to your employer).

If that amount x 4% doesn’t equal the match amount, call your payroll department. The 401k people don’t really have enough insight into why your employer does what they do.

Best of luck and let us know if you get a resolution! :beer

On my W2 I have
12a AA- $16,390.97
12b DD - $4,962.36
12c and 12d are blank

Is the match supposed to be 4% of what I contributed or what I earned for the year?
I read it as: lesser of 4% of eligible compensation or 100% of your contributions
It’s not clear to me if you’re comparing apples to apples: match for 2022 made in 2023, to 2022!income?
I'm only looking at my paychecks and W2 from 2022 and the match from 2022
How are you looking up 2022 match?

Have you looked at all itemized transactions from 2022 in your 401k? Often there are matching contributions all along the way and true up is just an extra one to catch up if you front loaded some of your contributions and didn't maintain the full year.
They only put it in 1x a year. Nothing else gets contributed for us.
PghPharmBoy
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Re: How does my employer figure the 401k match?

Post by PghPharmBoy »

@MrJedi -

Not being argumentative, but OP said their company deposits matching funds once per year in the following calendar year. This isn’t that unusual and I’m wondering if the discrepancy has to do with how the deferrals from each paycheck were set up. There was nothing mentioned about a catch-up payment.

OP - I would call your payroll department to get clarity. As others have said, code AA denotes a Roth contribution to your 401k and the amount listed should have generated a much bigger match for you.
Topic Author
passive101
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Re: How does my employer figure the 401k match?

Post by passive101 »

PghPharmBoy wrote: Mon Mar 27, 2023 8:42 am @MrJedi -

Not being argumentative, but OP said their company deposits matching funds once per year in the following calendar year. This isn’t that unusual and I’m wondering if the discrepancy has to do with how the deferrals from each paycheck were set up. There was nothing mentioned about a catch-up payment.

OP - I would call your payroll department to get clarity. As others have said, code AA denotes a Roth contribution to your 401k and the amount listed should have generated a much bigger match for you.
Is the 401k match usually based on the annual pay or how much I contribute to the 401k?
SnowBog
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Re: How does my employer figure the 401k match?

Post by SnowBog »

passive101 wrote: Mon Mar 27, 2023 8:48 am
PghPharmBoy wrote: Mon Mar 27, 2023 8:42 am @MrJedi -

Not being argumentative, but OP said their company deposits matching funds once per year in the following calendar year. This isn’t that unusual and I’m wondering if the discrepancy has to do with how the deferrals from each paycheck were set up. There was nothing mentioned about a catch-up payment.

OP - I would call your payroll department to get clarity. As others have said, code AA denotes a Roth contribution to your 401k and the amount listed should have generated a much bigger match for you.
Is the 401k match usually based on the annual pay or how much I contribute to the 401k?
If depends on the plan... Some are based on gross earnings, others based on contributions.
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teen persuasion
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Re: How does my employer figure the 401k match?

Post by teen persuasion »

erp wrote: Mon Mar 27, 2023 1:11 am
Hyperchicken wrote: Sun Mar 26, 2023 11:55 pm
passive101 wrote: Sun Mar 26, 2023 11:53 pm
Hyperchicken wrote: Sun Mar 26, 2023 11:52 pm You may need to go pay check by pay check, and see where your match is below 4% of your gross pay check amount.
The only way I can see what they put in for the match is looking at the 401k website.
You keep shooting down every suggestion your are given. It's your money. Figure it out.
It sounds like there's only 1 lump match so this wouldn't work. (if you're talking about OP's own contributions being below 4%, then you have a typo in your original suggestion which is probably the confusion)

OP, has the 4% match always been correct in previous years? Were you paid in different categories before too? But there's no subset of those categories that add up to 36k, so it doesn't seem like that's the problem.

btw your categories add up to about 72k instead of 74k. Also 1445 is exactly 2% of the 72k - I don't know if that's just a coincidence or a clue.
Is the match 100% on up to 4% of compensation, or perhaps 50% on up to 4%? That would result in 2%.

ETA: Just reread OP, and he does specify 100% of 4%.
Last edited by teen persuasion on Mon Mar 27, 2023 9:08 am, edited 1 time in total.
SnowBog
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Re: How does my employer figure the 401k match?

Post by SnowBog »

Let's look at this the other way... What is your contribution percent?

To get to the 401k amount you listed, based on the detailed income you listed (which doesn't match your annual growth), you'd need to be contributing something like 22.7% of every income source.

If that sounds too high, then my guess is the total amount you are seeing is the combination of your and employer contributions.

If that sounds right, then something is off somewhere else - as the numbers don't make sense...
Walkure
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Re: How does my employer figure the 401k match?

Post by Walkure »

passive101 wrote: Mon Mar 27, 2023 8:48 am
PghPharmBoy wrote: Mon Mar 27, 2023 8:42 am @MrJedi -

Not being argumentative, but OP said their company deposits matching funds once per year in the following calendar year. This isn’t that unusual and I’m wondering if the discrepancy has to do with how the deferrals from each paycheck were set up. There was nothing mentioned about a catch-up payment.

OP - I would call your payroll department to get clarity. As others have said, code AA denotes a Roth contribution to your 401k and the amount listed should have generated a much bigger match for you.
Is the 401k match usually based on the annual pay or how much I contribute to the 401k?
A "match" is by definition always based on your contributions. It sounds like what you have is not a match at all, more like a "safe harbor profit sharing contribution." These do not depend on you contributing anything at all, it's something the employer has to provide to get out of doing certain plan testing. However they have a lot of flexibility on when to provide it. I had a previous employer (small company) that would make the contribution based on 3% of your total compensation in August of the following year! The way to check this is see if your lump sum "2022 match" is actually 4% of your 2021 gross.
If it turns out this is what you have, and you ever leave this job for whatever reason, do not immediately rollover these funds to another plan; wait until the final employer contribution is made based on your prior year earnings.
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SmileyFace
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Re: How does my employer figure the 401k match?

Post by SmileyFace »

Of the 5 income types you list - it's possible the 4% max is based upon only 3 out of 5 of these. Or maybe you have a commission target (and exceeded it) and they only match 4% of hourly+commission-target. In any case - it's hard to reverse engineer what they might be doing - you need to ask payroll how they calculated the amount or read your terms document in more detail.
Also - as stated - make sure the "match" is based upon 100% of your contributions and not 50% or something (sounds like 4% salary is a cap and not the match percentage for sure based upon numbers).
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calmaniac
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Re: How does my employer figure the 401k match?

Post by calmaniac »

Just contact your HR and ask them to explain. Most of the above discussion is conjecture. You need facts.

Explaining such stuff is part of their job. No need to be accusatory, just be pleasant and ask how it is calculated so you can "better plan this year's contribution" or some such. Best to get the 401k documentation in writing and not just a verbal from HR.
"Pretired", working 20 h/wk. AA 75/25: 30% TSM, 19% value (VFVA/AVUV), 18% Int'l LC, 8% emerging, 25% GFund/VBTLX. Military pension ≈60% of expenses. Pension+SS@age 70 ≈100% of expenses.
SnowBog
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Re: How does my employer figure the 401k match?

Post by SnowBog »

calmaniac wrote: Mon Mar 27, 2023 10:04 am Just contact your HR and ask them to explain. Most of the above discussion is conjecture. You need facts.

Explaining such stuff is part of their job. No need to be accusatory, just be pleasant and ask how it is calculated so you can "better plan this year's contribution" or some such. Best to get the 401k documentation in writing and not just a verbal from HR.
And if HR doesn't know, reach out to your plan administrator and ask them.

The sad reality is there is very few plans work the same, and the differences can range between subtle to drastic. So the only way to understand how your plan works, is to talk with the people who understand your plan.

Per the posts above, something is clearly off...

Per my prior post, you might gain some insight comparing your contribution % versus the actual contribution. But if your contribution is accurate, something is really off...

Working backwards, $1445 / 4% = $36,125, which doesn't line up with any of your income items... So the numbers as shared don't seem to make sense... We can only "guess"... But your HR/plan administrator should be able to explain these to you...
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passive101
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Re: How does my employer figure the 401k match?

Post by passive101 »

SnowBog wrote: Mon Mar 27, 2023 9:02 am Let's look at this the other way... What is your contribution percent?

To get to the 401k amount you listed, based on the detailed income you listed (which doesn't match your annual growth), you'd need to be contributing something like 22.7% of every income source.

If that sounds too high, then my guess is the total amount you are seeing is the combination of your and employer contributions.

If that sounds right, then something is off somewhere else - as the numbers don't make sense...
I did 20-26% the whole year. This year I bumped it up to 28% 🙂
SnowBog
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Re: How does my employer figure the 401k match?

Post by SnowBog »

Congrats to you! That's an awesome savings rate!

As to your OP, I'm afraid you'll need to work with your HR and/or plan admin folks.

At I noted before:
SnowBog wrote: Mon Mar 27, 2023 10:15 am Working backwards, $1445 / 4% = $36,125, which doesn't line up with any of your income items... So the numbers as shared don't seem to make sense... We can only "guess"... But your HR/plan administrator should be able to explain these to you...
So unless that $36,125 number is meaningful to you, it's a mystery that I don't think anyone here can answer...

My assumption is the 4% would be based on your income eligible for 401k, which might exclude some things. But based on your prior numbers, there's no obvious connection to your income and the 4% amount you listed. So we are missing something...

But when you find the answer, please share! My curiosity is peaked.
sailaway
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Re: How does my employer figure the 401k match?

Post by sailaway »

Every match I have seen that is not per contribution is a percentage of salary only or salary and bonus. I have never seen tips or commissions included.
toddthebod
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Re: How does my employer figure the 401k match?

Post by toddthebod »

passive101 wrote: Sun Mar 26, 2023 12:09 am My employer is supposed to do a 4% match @ 100% in the 401k. For the whole year I contributed $16,390.97. Gross earnings are $74,035.86. The company contributed $1445.19

How did they come up with the $1445? I thought they would put in 4% of my annual income?



I am paid a combination of hourly, commission, and tips (If that matters)

Hourly = 15,075.18
Overtime = 651.40
Commission = 27,568.52
Tips = 28,602.47
PTO = 213.84
Where are you seeing the $1,445.67 figure? Do you have multiple 401(k) accounts when you look at the website? Does your plan have different matching rates for pre-tax and Roth deferrals?
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passive101
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Re: How does my employer figure the 401k match?

Post by passive101 »

toddthebod wrote: Mon Mar 27, 2023 2:51 pm
passive101 wrote: Sun Mar 26, 2023 12:09 am My employer is supposed to do a 4% match @ 100% in the 401k. For the whole year I contributed $16,390.97. Gross earnings are $74,035.86. The company contributed $1445.19

How did they come up with the $1445? I thought they would put in 4% of my annual income?



I am paid a combination of hourly, commission, and tips (If that matters)

Hourly = 15,075.18
Overtime = 651.40
Commission = 27,568.52
Tips = 28,602.47
PTO = 213.84
Where are you seeing the $1,445.67 figure? Do you have multiple 401(k) accounts when you look at the website? Does your plan have different matching rates for pre-tax and Roth deferrals?
Pretax and Roth both get the same 4% @100%. I can see what was put into the 401k. They only do it once a year and it goes in as company stock.
smitcat
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Re: How does my employer figure the 401k match?

Post by smitcat »

passive101 wrote: Mon Mar 27, 2023 3:06 pm
toddthebod wrote: Mon Mar 27, 2023 2:51 pm
passive101 wrote: Sun Mar 26, 2023 12:09 am My employer is supposed to do a 4% match @ 100% in the 401k. For the whole year I contributed $16,390.97. Gross earnings are $74,035.86. The company contributed $1445.19

How did they come up with the $1445? I thought they would put in 4% of my annual income?



I am paid a combination of hourly, commission, and tips (If that matters)

Hourly = 15,075.18
Overtime = 651.40
Commission = 27,568.52
Tips = 28,602.47
PTO = 213.84
Where are you seeing the $1,445.67 figure? Do you have multiple 401(k) accounts when you look at the website? Does your plan have different matching rates for pre-tax and Roth deferrals?
Pretax and Roth both get the same 4% @100%. I can see what was put into the 401k. They only do it once a year and it goes in as company stock.
Must read your plan docs.
Most common matching schemes....
"A partial matching scheme with an upper limit is more common. Assume that your employer matches 50% of your contributions, equal to up to 6% of your annual salary. If you earn $60,000, your contributions equal to 6% of your salary ($3,600) are eligible for matching. However, your employer only matches 50%, meaning the total matching benefit is still capped at $1,800. Under this formula, you must contribute twice as much to your retirement to reap the full benefit of employer matching."

Link to complete article:
https://www.investopedia.com/articles/p ... -works.asp
twh
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Re: How does my employer figure the 401k match?

Post by twh »

Matching with company stock is not a good thing.
toddthebod
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Re: How does my employer figure the 401k match?

Post by toddthebod »

passive101 wrote: Mon Mar 27, 2023 3:06 pm
toddthebod wrote: Mon Mar 27, 2023 2:51 pm
passive101 wrote: Sun Mar 26, 2023 12:09 am My employer is supposed to do a 4% match @ 100% in the 401k. For the whole year I contributed $16,390.97. Gross earnings are $74,035.86. The company contributed $1445.19

How did they come up with the $1445? I thought they would put in 4% of my annual income?



I am paid a combination of hourly, commission, and tips (If that matters)

Hourly = 15,075.18
Overtime = 651.40
Commission = 27,568.52
Tips = 28,602.47
PTO = 213.84
Where are you seeing the $1,445.67 figure? Do you have multiple 401(k) accounts when you look at the website? Does your plan have different matching rates for pre-tax and Roth deferrals?
Pretax and Roth both get the same 4% @100%. I can see what was put into the 401k. They only do it once a year and it goes in as company stock.
How much did your company stock fall last year?!

Here's my prediction: paycheck by paycheck, they internally account for the match in shares of company stock at the market value at that time. Then, the next year, they transfer the shares all at once, regardless of what happened to the share price along the way.

Also, this stock is in a separate account from your contributions, right? Because the match should all be pre-tax.
lakpr
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Re: How does my employer figure the 401k match?

Post by lakpr »

PghPharmBoy wrote: Mon Mar 27, 2023 6:39 am
passive101 wrote: Sun Mar 26, 2023 11:17 pm
lazybones18 wrote: Sun Mar 26, 2023 11:16 pm "Yup, they only put money in from last year in a lump some the following year."

what do you mean by this ?
employer contributed for year 2022 in the year of 2023 ? I have never heard of this

usually they should match 4% of your every weekly paycheck.

e.g. your weekly paycheck is $2,000. You contribute $80. Employer should contribute/match $80 in the same weekly pay period
Yup. They only contribute 1x for last year in the following year. I’ve worked for a factory that did the same thing. They do it, because if you quite or get fired before that date they don’t have to pay you anything and you forfeit it.
OP - I’ve worked for a company that did this. The match was provided in one lump sum in March of the following year. There was never any accounting for it anywhere - it just appeared in the 401(k) on a certain date.
This is called "TRUE-UP". My company does this too. The employer match shows up on Jan-31 paycheck of the following year. Depending on your view point, it is either advantageous or disadvantageous. From my view point, it is advantageous as it would free me from having to calculate the exact percentage per paycheck, and sweating whether any bonus I am eligible for would make me miss the maximum employer match.

Currently I set 50% of my paycheck to Traditional 401(k), 10% of the paycheck to Roth 401(k), and 10% of the paycheck to after-tax 401(k) which gets converted to Roth 401(k) as quickly as possible. With 70% of my paycheck going to the retirement, my first 8 paychecks of the year, after other deductions such as healthcare premiums, transit expenses, etc. is just $200 per paycheck ...
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passive101
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Re: How does my employer figure the 401k match?

Post by passive101 »

I’m looking over the 401k rules and it says since I’ve been with the company for 3 years that I’m only 40% vested. Is this why the number could be lower?

It does say that tips are not included towards the 401k match. However it says everything else that is taxable is considered. So that should be the Hourly, over time, PTO, and commission. That should be $44,583.94 (everything else added together)

That should come to $1783.36 if it’s 4% of that I think.
Topic Author
passive101
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Re: How does my employer figure the 401k match?

Post by passive101 »

I SOLVED THE MYSTERY!

Thank you everyone for helping me narrow down what I was missing. Some of you were right I think. I completely missed this. They put 1/2 of the match in cash and 1/2 of the match in company stock. I don’t know where the cash is in the account, but I was looking through the contributions. On 3/6 and 3/10 of this year their are 2 contributions. The totals are $1480.72 & $1480.71 These 2 together equal $2961.43 which is exactly 4% of my total gross earnings of $74,035.86

Maybe the cash just goes into the Vanguard S&P 500 fund that I have chosen for my investment here. I’m not certain. I’m now also more confused by reading the 401k rules that say tips aren’t figured into the 401k match, but I guess they must be :confused



I’m going to put this in the first post as well.
lakpr
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Re: How does my employer figure the 401k match?

Post by lakpr »

OP, I suggest editing the title of the first post in the thread too, putting "[Solved]" as prefix, including the square parentheses
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