Day 2: The only guaranteed 100% return
You might be taking a voluntary pay cut. Here is how to fix your 401(k) before December 31.
If I told you I had an investment that guaranteed a 100% return immediately, you would think I was running a Ponzi scheme.
But that is exactly what an employer 401(k) match is. If your company matches 4% and you aren't putting in at least 4%, you are voluntarily taking a pay cut.
We are in late November. You have about 3 paychecks left in the year. This is your final window to fix expensive mistakes before the books close on 2026.
The "free money" math
Let's look at the numbers. If you make $100,000 and your employer matches 4%, that is $4,000 of free money.
- You contribute: $4,000
- They contribute: $4,000
- Immediate return: 100%
If you skip this, you aren't saving money: you are rejecting a raise. Over 30 years, assuming a 7% return, that single year of missed matching ($4,000) would have grown to over $30,000. Do that a few years in a row, and you are torching six figures of retirement wealth.
Mistake 1: the front-loading trap (high earners watch out)
This is where I see high-performers get hurt. Did you hit the IRS 402(g) limit ($24,500) back in September? You might have screwed yourself.
Here is the math:
- Most plans match per pay period.
- If you maxed out in September, your contribution for October, November, and December is $0.
- Therefore, the company match for those months is also $0.
- You effectively capped your own bonus.
Pull your Summary Plan Description and search for a "True-Up Provision." If yes: good news, the company will calculate at year-end and credit your account for the missed match. If no: you just lost thousands. Next year, run a pacing strategy to hit the max on December 31, not in Q3.
Mistake 2: the cash trap
I see this constantly when auditing accounts. You set up the contribution, the money comes out of your paycheck, and it lands in your 401(k). But you never picked an investment.
So for the last 5 years, your money has been sitting in a money market or stable value fund earning 2%. Inflation is eating you alive.
- Log in and check your holdings.
- If you see "Cash," "Reserves," or "Money Market," you need to move it.
- The easy fix: look for a Target Date Fund, for example Target Retirement 2055. It is a set-it-and-forget-it tool that automatically diversifies for you.
The big question: Roth or Traditional?
Since you are logging in to fix your contribution % anyway, check how you are contributing.
- Traditional 401(k): You take the tax deduction now. You pay taxes when you pull the money out in retirement.
- Roth 401(k): You pay taxes now. The money grows tax-free forever.
My take: if you are early in your career or expect taxes to go up, which given the national debt is a safe bet, I love the Roth. I would rather pay the tax on the seed, the contribution, than pay the tax on the harvest, the millions it grows into.
Your action plan: the 10-minute audit
Don't just read this. Open a new tab and do this now:
- Log in: Go to your 401(k) provider.
- Check YTD match: If you haven't maximized the match, crank your contribution to 50%+ for the remaining paychecks of the year.
- Check your fund: Make sure you aren't sitting in cash.
- Check your type: Decide if you should switch future contributions to Roth.
Don't leave a 100% return sitting in your company's bank account. Put it in yours.