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Comment by tshaddox | Hacker News Reader

Out of curiosity, why does your 401k max out in November? If your employee does matching then wouldn’t you want to spread it as evenly as possible throughout the entire year?

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November is pretty close to the whole year. If you choose a fixed % per paycheck and have a bonus that's not perfectly amortized then being off by a month is actually pretty good.

I assumed that employer contribution matching is generally a fixed percentage of the employee’s salary each pay period, which means that if you don’t contribute in one month you forfeit that percentage of your salary and thus about 8% of your total possible employer matching.

At least in my case as an engineer at a smaller tech company my 401k (and corresponding match) maxes out each January because that's when bonuses are granted.

Note: you can set your contribution % to 0 in January and then change it in February. This can be worthwhile because you then DCA throughout the rest of the year. On the other hand, by contributing everything in January, you get the employer match earlier. And over a 30 year career it's likely a rounding error.

I've seen it work different ways and different companies. It's either a % of salary or a % of your gross paycheck. In the latter case, bonuses can mess things up.

If you assume a bull market it's best to max out the 401K ASAP, because if stock prices rise throughout the year you want to buy stock early before it gets expensive. A lot of FANG employees max out their 401K in January because they set their bonus 401K percentage to 100% and just fully fund their 401K from the bonus.

This strategy is getting reamed this year, but it's historically been a good bet about 85% of the time.

Every company I've worked for accounts for that. I get my full match no matter when I max my 401k out. Of course different companies work differently.

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