If your retirement contribution match was suspended earlier this year due to COVID-19, it’s possible that that match is resuming, as some companies are feeling more stable on their financial footing.  Remember that your employer match is essentially free money that gets put into your retirement account by your employer, as long as you are also making a required contribution (such as 4%).

What do I need to do to take advantage of this?  There are three general bins you might fall into.  Here’s how you figure out which situation you’re in, and what to do next.

First bin: 

Some people had turned off their retirement contributions when their income got bumpy earlier this year, to save that extra take-home pay, since it wasn’t going to be getting a match.  If that’s you, and you now feel like you have the means, you may want to re-start your 403b/401k contribution. 

When should you do that?  The short answer is – as soon as possible, just get it done.  But the longer answer, especially if you don’t feel like you can afford to contribute before you’re receiving a match to make it worthwhile, is likely about 2-3 weeks before the match is supposed to start hitting paychecks again.  That’s because you have to go not to your employer to make this adjustment, but to your 403b/401k custodian (like Fidelity), and there needs to be time for this paperwork change to process through multiple levels.  So for example, if your first payday with the resumed match was X, and the timekeeping day was X-7, you should be filing paperwork with the custodian on something like day X-14 to X-21.

Second bin: 

Didn’t have to turn off your contributions, but not approaching maxing out ($19.5k or $26k) in 2020. 

This is the easy bin, you can just let it ride.

Third bin: 

You will be maxing out your 403b/401k contributions in 2020.  Maybe your pay rate was cut.  Maybe you accelerated your contributions since your employer hadn’t expected to be able to resume the match and you knew that time in the market was highly valuable (on average).  Either way, your contribution schedule was messed with, and now you’re in re-calculation land. 

Time to calculate what your contributions need to be for the rest of the year, and unless your employer offers a true-up (less likely), you need to make sure that you’re contributing your minimum X% on every single paycheck during the match-resumed time.  In other words, you have to make your contributions each eligible pay period to obtain that match, and that requires not having hit $19.5k/$26k before the end of the year.

Not sure what a true-up is? Come back for the next article that will walk you through it.