Maxing Out Your 401(k) Too Early Could Cost You — Here’s Why

Most companies match 401(k) contributions per paycheck, not as a lump sum. If you max out your contributions early — say by June — you stop contributing for the rest of the year. That means your employer might stop matching too, even if you're technically eligible for a full match.

Let’s assume:

• Annual 401(k) limit: $23,500 (2025 IRS limit for under 50)

• Employer match: 5% of each paycheck (up to the IRS limit)

• Employee salary: $100,000/year

• Pay frequency: Biweekly (26 pay periods)

Scenario A: You Max Out by June

Pay Period	Employee Contribution	Employer Match
Jan–Jun	~$1,807 per paycheck	$192 per paycheck
Jul–Dec	$0 (maxed out)	❌ $0 — No match given

• Total match received: ~$2,500 (first half of year)

• Match lost: ❌ ~$2,500 (second half missed)

  
  

Scenario B: You Spread Contributions Evenly All Year

Pay Period	Employee Contribution	Employer Match
Jan–Dec	~$885 per paycheck	$192 per paycheck

• Total match received: ✅ ~$5,000 (full match captured)

Result: You Lost $2,500 in Free Money

That’s money you could have invested — and over 20+ years, it could grow to $10,000–$20,000 or more, depending on market performance.

Check if your employer offers a "true-up" contribution — some companies catch you up at year-end. But not all do. If they don’t, pacing your contributions across the full year may be the smarter move.