Matching 401K Percentages
My new Company offers a 100% Matching 401K to 3.5% based on paycheck amount.
The company that manages the 401K is through PayChex
The system only allows the contributor to type in whole numbers for percentages.
I can type 3% or 4%, but not 3.5%
If I type 3%, it matches Dollar of Dollar
If I type in 4%, it matches less than Dollar for Dollar
I contacted PayChex and asked them to set it to 3.5%, but they say that’s impossible and that all 401K’s only allow the contributor to use whole numbers.
Is it true that all 401K are like this?
If so, what is the point of allowing the Company to offer 3.5% when the user cannot select that percentage?
Money is SUPER tight with all this inflation, every penny counts.
Thanks for reaching out to NerdWallet; that's a great question!
We don’t currently have any resources to help with fractional percentage 401(k) contributions. I did some online searching, and it appears that some 401(k) providers simply choose to restrict contributions to whole number percentages. Speaking with your employer's human resources department may be helpful.
Something that may work is just doing some basic mathematical juggling. For example, a person could contribute an amount very close to 3.5% per year by contributing 7% for six months, then 2% for six months.
One more option is to have your question answered on the NerdWallet SmartMoney podcast. Call or text 901-730-6373 or email firstname.lastname@example.org to submit your question.
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