Does front-loading my HSA mean I'm missing out on 401(k) contributions?

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index2max
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Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by index2max » Wed Jan 15, 2020 9:30 pm

Hi all,

I have been front-loading my 2020 HSA family contributions over the first few paychecks. Once I hit the maximum annual contribution limit, my paycheck will go back to normal, except no HSA deductions will be taken out since I'll have them done early.

The head of HR at my company wondered whether I am missing out on 401(k) matches by doing this.

My 401(k) plan works like this. If I contribute 6% of my own paycheck, my employer will put in an extra 3.5% of their own money on top of that. That means 9.5% for the price of just 6% of my own money. I am paid semi-monthly.

Since the matching contributions percentage-based, it shouldn't really matter whether I was contributing to the HSA over all 26 of my paychecks or putting in the money up front, right?

Just wanted to double check that with you all here.

Thank you!

EDIT: I live in a state that does NOT tax HSA contributions. This means they are 100% pre-tax deductions (federal/state income tax and FICA)
Last edited by index2max on Wed Jan 15, 2020 9:52 pm, edited 1 time in total.

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anon_investor
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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by anon_investor » Wed Jan 15, 2020 9:37 pm

Sounds like something you should talk to your company payroll or benefits person about since it is company policy specific.

sailaway
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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by sailaway » Wed Jan 15, 2020 9:44 pm

It may depend on the ordering of things. Some (most?) deductions are done as % of gross. However, since HSA deductions are pre-FICA, perhaps they are subtracted out prior to calculating the % for 401k? Look at your paystub and do some math.

Spirit Rider
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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by Spirit Rider » Wed Jan 15, 2020 9:47 pm

If you were not making 6% 401k contributions and your plan does not do what is known as a true-up at the end of the year (most do not). You will not receive a match on any amount of any paychecks < 6%.

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index2max
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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by index2max » Wed Jan 15, 2020 9:53 pm

Spirit Rider wrote:
Wed Jan 15, 2020 9:47 pm
If you were not making 6% 401k contributions and your plan does not do what is known as a true-up at the end of the year (most do not). You will not receive a match on any amount of any paychecks < 6%.
I'll specify how our matching program works just in case it makes any difference.

On the first 1% of my paycheck I contribute to my 401(k), my company matches it at 100%. So I get 2% for the price of 1% of my own money.

On the next 5% I put in, my company matches at 0.5%. So I get another 2.5% for the price of an additional 5%.

In total, I put in 6% of my money for a total of 9.5% to my 401(k) plan.

I'll ask about this "true-up" business.
anon_investor wrote:
Wed Jan 15, 2020 9:37 pm
Sounds like something you should talk to your company payroll or benefits person about since it is company policy specific.
Yeah, sounds like I'll need to do that. Worst case scenario, I put in just a tiny bit more to make sure I get all the matching money on the table.

niceguy7376
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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by niceguy7376 » Wed Jan 15, 2020 9:57 pm

OP,
forget about the match. How much of the pay are you contributing to the 401k while you were front loading the HSA? Is it 6% of gross or less or more?

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index2max
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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by index2max » Wed Jan 15, 2020 10:01 pm

niceguy7376 wrote:
Wed Jan 15, 2020 9:57 pm
OP,
forget about the match. How much of the pay are you contributing to the 401k while you were front loading the HSA? Is it 6% of gross or less or more?
It was way less than 6% of gross. Only 0.238% of gross pay. My next paycheck should go completely to the HSA. Was still working out some kinks in the ADP system at work.

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anon_investor
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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by anon_investor » Wed Jan 15, 2020 10:07 pm

Just from personal experience with different 401k plans I have had, the matches have worked differently, so you need to talk to the appropriate people at your company.

For my current employer you have to contribute per pay check a certain % to get the full match (if you do less than that % for one pay check, you will lose out on the match for the pay check). With a prior employer, it did not matter how I distributed my contributions (0% one pay check, 10% on the next, etc.), at the end of the year they would do a "true up" and I would get the full match.

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index2max
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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by index2max » Wed Jan 15, 2020 10:10 pm

anon_investor wrote:
Wed Jan 15, 2020 10:07 pm
Just from personal experience with different 401k plans I have had, the matches have worked differently, so you need to talk to the appropriate people at your company.

For my current employer you have to contribute per pay check a certain % to get the full match (if you do less than that % for one pay check, you will lose out on the match for the pay check). With a prior employer, it did not matter how I distributed my contributions (0% one pay check, 10% on the next, etc.), at the end of the year they would do a "true up" and I would get the full match.
Based on conversations I had with HR previously, it seems like they do a "true-up", but I'll need to double check. When I ask them, I'll use that same terminology. If the head of HR isn't exactly sure, someone else in accounting should know, hopefully.

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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by whodidntante » Wed Jan 15, 2020 11:59 pm

This could reduce your match if:
There is no true-up or you don't qualify for the true-up. AND:
You don't contribute enough each pay period to earn the full match.

I front-load my HSA contributions as well, but I leave plenty of water at the bottom of the well. This year I'm contributing $1,000 every two weeks until I ring the bell. Maybe you could do it like that next year.

I have found that my payroll dept is not prepared for any outlier cases and definitely not prepared for pop quizzes about weird things that well-compensated people might want to do. Take it easy on your employer.

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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by whodidntante » Thu Jan 16, 2020 12:01 am

index2max wrote:
Wed Jan 15, 2020 10:10 pm
anon_investor wrote:
Wed Jan 15, 2020 10:07 pm
Just from personal experience with different 401k plans I have had, the matches have worked differently, so you need to talk to the appropriate people at your company.

For my current employer you have to contribute per pay check a certain % to get the full match (if you do less than that % for one pay check, you will lose out on the match for the pay check). With a prior employer, it did not matter how I distributed my contributions (0% one pay check, 10% on the next, etc.), at the end of the year they would do a "true up" and I would get the full match.
Based on conversations I had with HR previously, it seems like they do a "true-up", but I'll need to double check. When I ask them, I'll use that same terminology. If the head of HR isn't exactly sure, someone else in accounting should know, hopefully.
It will be spelled out clearly in the plan document. Not the summary plan description, the plan document. It's a useful and horrifically boring document, more effective than sedatives.

Goal33
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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by Goal33 » Thu Jan 16, 2020 12:43 am

Why risk it? Just don’t front load so heavily....
A man with one watch always knows what time it is; a man with two watches is never sure.

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Tamarind
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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by Tamarind » Thu Jan 16, 2020 3:43 am

Sounds like you would miss out on match unless there's a true-up.

A separate reason not to front-load is that your contribution limit is tied to how many months you are all covered by an HDHP. In the event you or spouse changes jobs unexpectedly and doesn't have access to one, you'd have to deal with a return of excess contributions on top of all the rest of the hassle.

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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by niceguy7376 » Thu Jan 16, 2020 8:12 am

index2max wrote:
Wed Jan 15, 2020 10:01 pm
niceguy7376 wrote:
Wed Jan 15, 2020 9:57 pm
OP,
forget about the match. How much of the pay are you contributing to the 401k while you were front loading the HSA? Is it 6% of gross or less or more?
It was way less than 6% of gross. Only 0.238% of gross pay. My next paycheck should go completely to the HSA. Was still working out some kinks in the ADP system at work.
In that case, front loading HSA is a bad financial decision as you are losing up on the match immediately. Even if they make a "true up" match later, you will lose the duration of investment.
I would spread HSA evenly across all paychecks and try to get as much match on 401k as possible.

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index2max
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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by index2max » Thu Jan 16, 2020 8:52 am

whodidntante wrote:
Wed Jan 15, 2020 11:59 pm
This could reduce your match if:
There is no true-up or you don't qualify for the true-up. AND:
You don't contribute enough each pay period to earn the full match.

I front-load my HSA contributions as well, but I leave plenty of water at the bottom of the well. This year I'm contributing $1,000 every two weeks until I ring the bell. Maybe you could do it like that next year.

I have found that my payroll dept is not prepared for any outlier cases and definitely not prepared for pop quizzes about weird things that well-compensated people might want to do. Take it easy on your employer.
I get what you're saying. I'm not trying to make things tougher for HR, but they were advertising the ability to front-load the HSAs this year. I have enough saved up in my checking account to handle this month's expenses, especially since we have credit cards nowadays. If it turns out I lost out on some of the match, I'm not going to lose sleep over it, I just won't front load all of it in the first month or so next year.

Hopefully I didn't depending on how the company manages their 401(k) matching contributions. I'll take a look at the full legally-binding plan document, not the summary. I've scanned through it once before I think. You're right, with all the required legal definitions in there, it can get quite boring to read :wink:

jhh9327
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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by jhh9327 » Thu Jan 16, 2020 10:13 am

Can the OP or someone else provide a theorotical example of numbers of what the issue here is? I'm not getting how front loading the HSA versus steady HSA contributions will reduce the overall 401k match for the year.

Spirit Rider
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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by Spirit Rider » Thu Jan 16, 2020 10:26 am

The OP receives an employer match on up to 6% of compensation each pay period. Any pay period where the front loading of the HSA contribution reduces the available compensation to < 6%. The OP's 401k employee deferrals will be limited to that amount and they will not receive the full employer match for that period. In most 401k plans that is the end of the story.

However, in some plans there is a match true-up after the end of the year. If after front-loading HSA contributions, the OP increases 401k employee deferrals such that their total 401k employee deferrals for the year are >= 6% of their compensation. The plan will "true up" the match for the year on 6% of compensation.
Last edited by Spirit Rider on Thu Jan 16, 2020 10:28 am, edited 1 time in total.

rterickson
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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by rterickson » Thu Jan 16, 2020 10:28 am

niceguy7376 wrote:
Thu Jan 16, 2020 8:12 am

I would spread HSA evenly across all paychecks and try to get as much match on 401k as possible.
This.

You're not going to get to where you think you're going by only contributing 0.238% to your 401k. You have great choices in your plan, you should be doing everything you can to max. it out.

Several posters have pointed out potential downsides, what is the perceived benefit of front-loading the HSA?

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index2max
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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by index2max » Thu Jan 16, 2020 10:41 am

rterickson wrote:
Thu Jan 16, 2020 10:28 am
niceguy7376 wrote:
Thu Jan 16, 2020 8:12 am

I would spread HSA evenly across all paychecks and try to get as much match on 401k as possible.
This.

You're not going to get to where you think you're going by only contributing 0.238% to your 401k. You have great choices in your plan, you should be doing everything you can to max. it out.

Several posters have pointed out potential downsides, what is the perceived benefit of front-loading the HSA?
I’m just trying to invest early for the dividends.

I maxed out my Roth IRA right on Jan 2nd, and I like maxing out my HSA early too.

It all depends on whether my company does indeed do a true-up at the end of the year.

My HR contact did say that the company checks that employees were putting in 6% of annual gross pay and if so, makes sure that employee got the full match. If that’s true, I just need to contribute a little more to each paycheck for the rest of the year or do small lump sum next month to get me back on track.

jhh9327
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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by jhh9327 » Thu Jan 16, 2020 10:45 am

Spirit Rider wrote:
Thu Jan 16, 2020 10:26 am
The OP receives an employer match on up to 6% of compensation each pay period. Any pay period where the front loading of the HSA contribution reduces the available compensation to < 6%. The OP's 401k employee deferrals will be limited to that amount and they will not receive the full employer match for that period. In most 401k plans that is the end of the story.

However, in some plans there is a match true-up after the end of the year. If after front-loading HSA contributions, the OP increases 401k employee deferrals such that their total 401k employee deferrals for the year are >= 6% of their compensation. The plan will "true up" the match for the year on 6% of compensation.
But won't the OP make it up by having a higher match the rest of the year since the HSA will be funded already? Did the OP lower his 401(k) contribution % (I don't think so)? I'm taking it as 0.238% is because all the money in that paycheck is going to the HSA and there is not much left for the 401(k) right now, but he/she will have more going towards the 401(k) the rest of the year. Why won't this wash out by the end of the year?

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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by an_asker » Thu Jan 16, 2020 10:49 am

index2max wrote:
Wed Jan 15, 2020 9:30 pm
Hi all,

I have been front-loading my 2020 HSA family contributions over the first few paychecks. Once I hit the maximum annual contribution limit, my paycheck will go back to normal, except no HSA deductions will be taken out since I'll have them done early.

The head of HR at my company wondered whether I am missing out on 401(k) matches by doing this.

My 401(k) plan works like this. If I contribute 6% of my own paycheck, my employer will put in an extra 3.5% of their own money on top of that. That means 9.5% for the price of just 6% of my own money. I am paid semi-monthly.

Since the matching contributions percentage-based, it shouldn't really matter whether I was contributing to the HSA over all 26 of my paychecks or putting in the money up front, right?

Just wanted to double check that with you all here.

Thank you!

EDIT: I live in a state that does NOT tax HSA contributions. This means they are 100% pre-tax deductions (federal/state income tax and FICA)
I am confused. What does HSA have to do with 401(k)?

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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by an_asker » Thu Jan 16, 2020 10:51 am

index2max wrote:
Wed Jan 15, 2020 10:01 pm
niceguy7376 wrote:
Wed Jan 15, 2020 9:57 pm
OP,
forget about the match. How much of the pay are you contributing to the 401k while you were front loading the HSA? Is it 6% of gross or less or more?
It was way less than 6% of gross. Only 0.238% of gross pay. My next paycheck should go completely to the HSA. Was still working out some kinks in the ADP system at work.
Aha! In this case, it's a no-brainer. Based on your OP, you're leaving money on the table!

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index2max
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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by index2max » Thu Jan 16, 2020 11:03 am

The plan summary alone has this in the section about matching contributions:

Matching contributions are calculated based on your page and 401(k) elective deferrals for the payroll period. Matching contributions are made for all persons who are active participants at any time during that payroll period.

We may make an additional matching contribution after the end of the playing year (see part 8). Additional matching contributions are made for all persons who are eligible for an additional matching contribution.

You are eligible for an additional matching contribution on any [sic] December 31, if you were an active participant at any time during the plane year. Any percentage chosen will apply for the entire plane year. Our matching contribution for you for the plane year will not be more than 4% of pay.


Seems like my employer is offering a true-up that will double check if I put in 6% of my annual salary to get a full match. Will ask for the full plan document that’s legal binding.

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anon_investor
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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by anon_investor » Thu Jan 16, 2020 11:08 am

index2max wrote:
Thu Jan 16, 2020 11:03 am
The plan summary alone has this in the section about matching contributions:

Matching contributions are calculated based on your page and 401(k) elective deferrals for the payroll period. Matching contributions are made for all persons who are active participants at any time during that payroll period.

We may make an additional matching contribution after the end of the playing year (see part 8). Additional matching contributions are made for all persons who are eligible for an additional matching contribution.

You are eligible for an additional matching contribution on any [sic] December 31, if you were an active participant at any time during the plane year. Any percentage chosen will apply for the entire plane year. Our matching contribution for you for the plane year will not be more than 4% of pay.


Seems like my employer is offering a true-up that will double check if I put in 6% of my annual salary to get a full match. Will ask for the full plan document that’s legal binding.
It says "We may make an additional matching contribution after the end of the playing year", it it is still worth confirming with the appropriate person/people at your company; but at least your company's 401k plan does allow for them to give a true up.

Curious when you are given the matching contributions. Do they normally give it per pay check, at the end of the year, or some later date. My current employer contributes their match when my contribution is invested. My last employer gave the entire match on 12/31 at the end of the year, and another prior employer gave it like a year after the contribution year (ended up getting a match like a year after I left that job, which meant I had to leave my money in a crappy higher fee 401k for an extra year...).

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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by sailaway » Thu Jan 16, 2020 11:11 am

index2max wrote:
Thu Jan 16, 2020 11:03 am
The plan summary alone has this in the section about matching contributions:

Matching contributions are calculated based on your page and 401(k) elective deferrals for the payroll period. Matching contributions are made for all persons who are active participants at any time during that payroll period.

We may make an additional matching contribution after the end of the playing year (see part 8). Additional matching contributions are made for all persons who are eligible for an additional matching contribution.

You are eligible for an additional matching contribution on any [sic] December 31, if you were an active participant at any time during the plane year. Any percentage chosen will apply for the entire plane year. Our matching contribution for you for the plane year will not be more than 4% of pay.


Seems like my employer is offering a true-up that will double check if I put in 6% of my annual salary to get a full match. Will ask for the full plan document that’s legal binding.
Actually, it does not sound like a true up, based on the first sentence. The rest sounds like they might decide to increase the match after they run the books for the year (safe harbor? profit sharing?) and you would be eligible for that full increased match no matter when you put your funds in.

jrbdmb
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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by jrbdmb » Thu Jan 16, 2020 11:16 am

You are over thinking this. Contribute a minimum of 6% to your 401K no matter what, so you are guaranteed the full company match. Then contribute as much as you can to the HSA and other retirement accounts. (Until you can confirm otherwise, assume that you are now leaving money on the table.)

One other thing - does your company provide any matching contributions for your HSA? Mine does, and if I front-loaded my HSA contribution I would lose my employer HSA match for the remainder of the year.
Last edited by jrbdmb on Thu Jan 16, 2020 11:32 am, edited 5 times in total.

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index2max
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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by index2max » Thu Jan 16, 2020 11:18 am

anon_investor wrote:
Thu Jan 16, 2020 11:08 am
index2max wrote:
Thu Jan 16, 2020 11:03 am
The plan summary alone has this in the section about matching contributions:

Matching contributions are calculated based on your page and 401(k) elective deferrals for the payroll period. Matching contributions are made for all persons who are active participants at any time during that payroll period.

We may make an additional matching contribution after the end of the playing year (see part 8). Additional matching contributions are made for all persons who are eligible for an additional matching contribution.

You are eligible for an additional matching contribution on any [sic] December 31, if you were an active participant at any time during the plane year. Any percentage chosen will apply for the entire plane year. Our matching contribution for you for the plane year will not be more than 4% of pay.


Seems like my employer is offering a true-up that will double check if I put in 6% of my annual salary to get a full match. Will ask for the full plan document that’s legal binding.
It says "We may make an additional matching contribution after the end of the playing year", it it is still worth confirming with the appropriate person/people at your company; but at least your company's 401k plan does allow for them to give a true up.

Curious when you are given the matching contributions. Do they normally give it per pay check, at the end of the year, or some later date. My current employer contributes their match when my contribution is invested. My last employer gave the entire match on 12/31 at the end of the year, and another prior employer gave it like a year after the contribution year (ended up getting a match like a year after I left that job, which meant I had to leave my money in a crappy higher fee 401k for an extra year...).
I get matching contributions with each semi-monthly paycheck. They are invested with my 401(k) deductions.

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anon_investor
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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by anon_investor » Thu Jan 16, 2020 11:21 am

index2max wrote:
Thu Jan 16, 2020 11:18 am
anon_investor wrote:
Thu Jan 16, 2020 11:08 am
index2max wrote:
Thu Jan 16, 2020 11:03 am
The plan summary alone has this in the section about matching contributions:

Matching contributions are calculated based on your page and 401(k) elective deferrals for the payroll period. Matching contributions are made for all persons who are active participants at any time during that payroll period.

We may make an additional matching contribution after the end of the playing year (see part 8). Additional matching contributions are made for all persons who are eligible for an additional matching contribution.

You are eligible for an additional matching contribution on any [sic] December 31, if you were an active participant at any time during the plane year. Any percentage chosen will apply for the entire plane year. Our matching contribution for you for the plane year will not be more than 4% of pay.


Seems like my employer is offering a true-up that will double check if I put in 6% of my annual salary to get a full match. Will ask for the full plan document that’s legal binding.
It says "We may make an additional matching contribution after the end of the playing year", it it is still worth confirming with the appropriate person/people at your company; but at least your company's 401k plan does allow for them to give a true up.

Curious when you are given the matching contributions. Do they normally give it per pay check, at the end of the year, or some later date. My current employer contributes their match when my contribution is invested. My last employer gave the entire match on 12/31 at the end of the year, and another prior employer gave it like a year after the contribution year (ended up getting a match like a year after I left that job, which meant I had to leave my money in a crappy higher fee 401k for an extra year...).
I get matching contributions with each semi-monthly paycheck. They are invested with my 401(k) deductions.
Okay. So yea, you just need to find out from your company about whether they will you the true up at the end of the year.

Spirit Rider
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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by Spirit Rider » Thu Jan 16, 2020 11:27 am

sailaway wrote:
Thu Jan 16, 2020 11:11 am
index2max wrote:
Thu Jan 16, 2020 11:03 am
The plan summary alone has this in the section about matching contributions:

Matching contributions are calculated based on your page and 401(k) elective deferrals for the payroll period. Matching contributions are made for all persons who are active participants at any time during that payroll period.

We may make an additional matching contribution after the end of the playing year (see part 8). Additional matching contributions are made for all persons who are eligible for an additional matching contribution.

You are eligible for an additional matching contribution on any [sic] December 31, if you were an active participant at any time during the plane year. Any percentage chosen will apply for the entire plane year. Our matching contribution for you for the plane year will not be more than 4% of pay.


Seems like my employer is offering a true-up that will double check if I put in 6% of my annual salary to get a full match. Will ask for the full plan document that’s legal binding.
Actually, it does not sound like a true up, based on the first sentence. The rest sounds like they might decide to increase the match after they run the books for the year (safe harbor? profit sharing?) and you would be eligible for that full increased match no matter when you put your funds in.
@sailaway is correct. This is a description of an "enhanced match" and not a description of an employer match true-up. A true-up description would be clear it was ensuring the match applied to compensation for the entire year. Even if it did not use the "true-up" language.

You really should be talking to the plan administrator first before trying to decipher SPD or plan language.

rasputin
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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by rasputin » Thu Jan 16, 2020 11:28 am

jrbdmb wrote:
Thu Jan 16, 2020 11:16 am
You are over thinking this. Contribute a minimum of 6% to your 401K no matter what, so you are guaranteed the full company match. Then contribute as much as you can to the HSA and other retirement accounts.

One other thing - does your company provide any matching contributions for your HSA? Mine does, and if I front-loaded my HSA contribution I would lose my employer HSA match for the remainder of the year.
This.

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index2max
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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by index2max » Thu Jan 16, 2020 11:43 am

rasputin wrote:
Thu Jan 16, 2020 11:28 am
jrbdmb wrote:
Thu Jan 16, 2020 11:16 am
You are over thinking this. Contribute a minimum of 6% to your 401K no matter what, so you are guaranteed the full company match. Then contribute as much as you can to the HSA and other retirement accounts.

One other thing - does your company provide any matching contributions for your HSA? Mine does, and if I front-loaded my HSA contribution I would lose my employer HSA match for the remainder of the year.
This.
My employer puts $1,500 into the HSA each year. $500 of it up-front at the beginning of January. I put in the remaining $5,600 from my own paychecks to max it out for 2020.

Spirit Rider
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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by Spirit Rider » Thu Jan 16, 2020 11:48 am

Even if the employer HSA contribution is not a match. If they make their contributions per pay period instead of a lump sump . They may not make an employer contribution if there is no employee contribution.

That is the way my last two employer's HSA contributions worked. They split their contribution into 24 contributions done on the first two bi-weekly pay periods of the month. If you didn't make at least a $1 employee contribution, you received no employer contribution that pay period.

Despite my attempts to convince them to Max out their HSA contributions. There were people who only contributed $1/pay period.

Topic Author
index2max
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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by index2max » Thu Jan 16, 2020 12:00 pm

Spirit Rider wrote:
Thu Jan 16, 2020 11:48 am
Even if the employer HSA contribution is not a match. If they make their contributions per pay period instead of a lump sump . They may not make an employer contribution if there is no employee contribution.

That is the way my last two employer's HSA contributions worked. They split their contribution into 24 contributions done on the first two bi-weekly pay periods of the month. If you didn't make at least a $1 employee contribution, you received no employer contribution that pay period.

Despite my attempts to convince them to Max out their HSA contributions. There were people who only contributed $1/pay period.
Ah, now I understand your concern.

After the $500 in January, my company puts in $90.90 ($1000/11) at the beginning of each month from Feb-Dec. It goes straight into my HSA base balance and is listed as an employee contribution.

Front-loading in my company’s case, doesn’t affect employer HSA contributions.

1130Super
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Location: Minnesota

Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by 1130Super » Thu Jan 16, 2020 1:40 pm

an_asker wrote:
Thu Jan 16, 2020 10:49 am
index2max wrote:
Wed Jan 15, 2020 9:30 pm
Hi all,

I have been front-loading my 2020 HSA family contributions over the first few paychecks. Once I hit the maximum annual contribution limit, my paycheck will go back to normal, except no HSA deductions will be taken out since I'll have them done early.

The head of HR at my company wondered whether I am missing out on 401(k) matches by doing this.

My 401(k) plan works like this. If I contribute 6% of my own paycheck, my employer will put in an extra 3.5% of their own money on top of that. That means 9.5% for the price of just 6% of my own money. I am paid semi-monthly.

Since the matching contributions percentage-based, it shouldn't really matter whether I was contributing to the HSA over all 26 of my paychecks or putting in the money up front, right?

Just wanted to double check that with you all here.

Thank you!

EDIT: I live in a state that does NOT tax HSA contributions. This means they are 100% pre-tax deductions (federal/state income tax and FICA)
I am confused. What does HSA have to do with 401(k)?
Because OP is putting 100% of check to HSA until maxes out , next year OP needs to only put 93% to HSA until max out so there is room for 6% 401k contribution so they get the match

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Location: Minnesota

Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by 1130Super » Thu Jan 16, 2020 1:44 pm

rasputin wrote:
Thu Jan 16, 2020 11:28 am
jrbdmb wrote:
Thu Jan 16, 2020 11:16 am
You are over thinking this. Contribute a minimum of 6% to your 401K no matter what, so you are guaranteed the full company match. Then contribute as much as you can to the HSA and other retirement accounts.

One other thing - does your company provide any matching contributions for your HSA? Mine does, and if I front-loaded my HSA contribution I would lose my employer HSA match for the remainder of the year.
This.
Bingo

wrongfunds
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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by wrongfunds » Thu Jan 16, 2020 1:46 pm

OP is very lucky; my paycheck have so many other deductions that if I decided to go 100% on HSA (and or 401K) I will not be able to pay various insurance amounts! Zero paycheck I can handle but negative paycheck would be a problem!

Topic Author
index2max
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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by index2max » Thu Jan 16, 2020 3:12 pm

It’s not 100% of my paycheck exactly, but everything less pre-tax deductions for health, dental and vision insurance.

I also put my paycheck into a roth 401(k).

Checked with my 401(k) administrator. The call center rep said that his internal system shows that my company does a true-up by the end of the year in case I missed out on any matching I’m entitled to.

He said I shouldn’t have to change anything on my end and can leave my contributions at 6% like normal.

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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by Spirit Rider » Thu Jan 16, 2020 4:19 pm

index2max wrote:
Thu Jan 16, 2020 3:12 pm
It’s not 100% of my paycheck exactly, but everything less pre-tax deductions for health, dental and vision insurance.

I also put my paycheck into a roth 401(k).

Checked with my 401(k) administrator. The call center rep said that his internal system shows that my company does a true-up by the end of the year in case I missed out on any matching I’m entitled to.

He said I shouldn’t have to change anything on my end and can leave my contributions at 6% like normal.
I'm pretty sure the CSR is incorrect. The true-up only "trues" up the match to what your actual employee deferrals were. If you only do 6% for your deferrals for the rest of the year, you will have < 6% of your yearly compensation as total employee deferrals for the year. That is what your true up will be based on.

You will need to increase your future employee deferrals such that the total represent at least 6% of your compensation for the year

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CalculatedRisk
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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by CalculatedRisk » Thu Jan 16, 2020 4:36 pm

whodidntante wrote:
Thu Jan 16, 2020 12:01 am
index2max wrote:
Wed Jan 15, 2020 10:10 pm
anon_investor wrote:
Wed Jan 15, 2020 10:07 pm
Just from personal experience with different 401k plans I have had, the matches have worked differently, so you need to talk to the appropriate people at your company.

For my current employer you have to contribute per pay check a certain % to get the full match (if you do less than that % for one pay check, you will lose out on the match for the pay check). With a prior employer, it did not matter how I distributed my contributions (0% one pay check, 10% on the next, etc.), at the end of the year they would do a "true up" and I would get the full match.
Based on conversations I had with HR previously, it seems like they do a "true-up", but I'll need to double check. When I ask them, I'll use that same terminology. If the head of HR isn't exactly sure, someone else in accounting should know, hopefully.
It will be spelled out clearly in the plan document. Not the summary plan description, the plan document. It's a useful and horrifically boring document, more effective than sedatives.
Is the employer required to provide a copy of the plan document? When I asked my employer, they pushed back. If they are required, do you know where that is documented?

Edit: Closest I could find is that they are required to provide access to the document, not necessarily provide a copy of the document:
https://www.govinfo.gov/content/pkg/CFR ... 104b-1.pdf
Plan administrators shall make copies of the latest annual report, and the bargaining agreement, trust agreement, contract, or other instruments under which the plan is established or operated available at all times in their principal offices.

wrongfunds
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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by wrongfunds » Thu Jan 16, 2020 6:13 pm

Spirit Rider wrote:
Thu Jan 16, 2020 4:19 pm
index2max wrote:
Thu Jan 16, 2020 3:12 pm
It’s not 100% of my paycheck exactly, but everything less pre-tax deductions for health, dental and vision insurance.

I also put my paycheck into a roth 401(k).

Checked with my 401(k) administrator. The call center rep said that his internal system shows that my company does a true-up by the end of the year in case I missed out on any matching I’m entitled to.

He said I shouldn’t have to change anything on my end and can leave my contributions at 6% like normal.
I'm pretty sure the CSR is incorrect. The true-up only "trues" up the match to what your actual employee deferrals were. If you only do 6% for your deferrals for the rest of the year, you will have < 6% of your yearly compensation as total employee deferrals for the year. That is what your true up will be based on.

You will need to increase your future employee deferrals such that the total represent at least 6% of your compensation for the year
I don't get it. Once he maxes HSA, then he should front-load his 401K until he hits 57K (or whatever that number is!) Doesn't he want his 401K money invested longer in the market? It is exactly the same principle that he is using to justify front loading HSA.

Who needs a paycheck? Those are highly overrated :-)

jrbdmb
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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by jrbdmb » Thu Jan 16, 2020 6:31 pm

wrongfunds wrote:
Thu Jan 16, 2020 6:13 pm
I don't get it. Once he maxes HSA, then he should front-load his 401K until he hits 57K (or whatever that number is!) Doesn't he want his 401K money invested longer in the market? It is exactly the same principle that he is using to justify front loading HSA.

Who needs a paycheck? Those are highly overrated :-)
I'm not clear on what advantage there is on front-loading HSA contributions vs. backing off on the HSA a bit and at least contributing enough to the 401K to guarantee you get all matching funds. There are both earning dividends and capital gains; there is a tax advantage to the HSA but I'm not sure that should drive his behavior.

Also, I prefer taking the route that guarantees the company match vs. the route that I think / should get the company match. Missing out on about a month of my company HSA match in 2019 due to a mistake on my part makes me not want to over-complicate things. (BTW, lost less than $100, not a big deal but annoying.)

wrongfunds
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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by wrongfunds » Thu Jan 16, 2020 6:53 pm

I do *slightly* front load 401-K and that is because
- we do have "true up" specifically listed as feature
- if I were to leave the company, the next company may have waiting period to get in their 401-K

In my company HSA/FSA needs to be funded with regular periodic deduction. At least our company does not have the ability to front load HSA/FSA to the best of my knowledge.

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whodidntante
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Re: Does front-loading my HSA mean I'm missing out on 401(k) contributions?

Post by whodidntante » Thu Jan 16, 2020 7:06 pm

CalculatedRisk wrote:
Thu Jan 16, 2020 4:36 pm
whodidntante wrote:
Thu Jan 16, 2020 12:01 am
index2max wrote:
Wed Jan 15, 2020 10:10 pm
anon_investor wrote:
Wed Jan 15, 2020 10:07 pm
Just from personal experience with different 401k plans I have had, the matches have worked differently, so you need to talk to the appropriate people at your company.

For my current employer you have to contribute per pay check a certain % to get the full match (if you do less than that % for one pay check, you will lose out on the match for the pay check). With a prior employer, it did not matter how I distributed my contributions (0% one pay check, 10% on the next, etc.), at the end of the year they would do a "true up" and I would get the full match.
Based on conversations I had with HR previously, it seems like they do a "true-up", but I'll need to double check. When I ask them, I'll use that same terminology. If the head of HR isn't exactly sure, someone else in accounting should know, hopefully.
It will be spelled out clearly in the plan document. Not the summary plan description, the plan document. It's a useful and horrifically boring document, more effective than sedatives.
Is the employer required to provide a copy of the plan document? When I asked my employer, they pushed back. If they are required, do you know where that is documented?

Edit: Closest I could find is that they are required to provide access to the document, not necessarily provide a copy of the document:
https://www.govinfo.gov/content/pkg/CFR ... 104b-1.pdf
Plan administrators shall make copies of the latest annual report, and the bargaining agreement, trust agreement, contract, or other instruments under which the plan is established or operated available at all times in their principal offices.
I don't know if they are required by law/regulation to provide it to you. I would hope that it doesn't matter if they are legally required to do it since it's a useful document and a reasonable thing to ask for. My wild guess is that you asked someone who had no idea how to find it, or maybe they didn't know what you were talking about. Some people are completely unable to say "I don't know."

I got it through the custodian. My employer was not involved or informed, as far as I know.

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