{"id":110519,"date":"2023-12-16T04:08:18","date_gmt":"2023-12-16T04:08:18","guid":{"rendered":"https:\/\/namso-gen.co\/blog\/what-is-a-401k-true-up\/"},"modified":"2023-12-16T04:08:18","modified_gmt":"2023-12-16T04:08:18","slug":"what-is-a-401k-true-up","status":"publish","type":"post","link":"https:\/\/namso-gen.co\/blog\/what-is-a-401k-true-up\/","title":{"rendered":"What is a 401k true-up?"},"content":{"rendered":"

What is a 401k True-Up?<\/p>\n

A 401k true-up is a term used to describe the process of reconciling any employer matching contributions that may have been missed by employees throughout the year. It ensures that employees receive the full employer match to which they are entitled.<\/p>\n

When employees contribute to their 401k plans, employers often match a portion of those contributions, based on a predetermined formula. This match is an attractive benefit that helps employees save more for retirement. However, most employers calculate their matching contribution on a per-pay-period basis, often referred to as per-pay-period matching. Per-pay-period matching means that employers match a certain percentage, such as 50% or 100%, of an employee’s contribution per pay period, up to a specified limit.<\/p>\n

Since many employees don’t contribute the maximum allowed amount to their 401k plans each pay period, they may end up missing out on some of the employer match. This discrepancy occurs when employees fail to contribute enough to receive the full matching contribution from their employers.<\/p>\n

A 401k true-up allows the employer to correct this shortfall at the end of the year. The true-up process involves examining an employee’s total annual contributions and comparing them to the matching contributions that should have been made throughout the year. If the employee missed out on any matching contributions, the employer will make up the difference in a lump sum. This ensures that the employee receives the full employer match based on their annual contributions.<\/p>\n

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