401K Match

[myjo]

What is the name of your state? New Jersey.
My company agreed to contribute to our 401K plan. Are they required to make this contribution every time I contribute (with each pay check) or can they contribute at the end of the year?
Won't we all be losing money if they make their contribution at the end of the year?
Thank you.

 

[Beth3]

My company agreed to contribute to our 401K plan. Are they required to make this contribution every time I contribute (with each pay check) or can they contribute at the end of the year? Your employer can contribute in whatever manner that is defined in the 401(k) Plan Document.

If it's a guaranteed match, then the employer's contribution generally must be made concurrently with the employee's contribution. If it's a discretionary match, then your employer doesn't have to make a match at all and if they do, they certainly can make it at year end - which makes sense if the discretionary contribution is based on company profitability.

Won't we all be losing money if they make their contribution at the end of the year? Maybe. It will depend on how you've directed your investments and what the stock market is doing (if you have monies in equities.) Over time though, yes. You will have missed out on the interest income and compounded interest income.

 

[myjo]

Thank you. It never occurred to me that it could be guaranteed or discretionary. I will check.