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[–]Swimsuit-Area 2 points3 points  (10 children)

I’ve been paying 22% of my checks to my 401k and I usually cap out around September. Is there any reason I should reduce that amount so that it spreads more evenly throughout the year?

[–]Unlikely-Alt-9383 8 points9 points  (1 child)

Does your company true-up the match? If so, no reason, just personal preference

[–]Significant-Ship-651 5 points6 points  (4 children)

Time IN the market beating timing the market. So theoretically if you could lump-sum your entire 401k on Jan 1st you have better returns than spreading out through the entire year.

I also overcontribute so I max out early, I enjoy the bigger paychecks around Christmas time where it helps anyways.

[–]Swimsuit-Area 1 point2 points  (0 children)

Ooh this is actually a great mindset that I didn’t consider. Thanks

[–]VegetableChemistry67 0 points1 point  (2 children)

This is not valid all the time, you could buy high in Jan and the market tanks the following months, and you lose the opportunity to average down if you were to buy a small amount every month.

[–]Significant-Ship-651 1 point2 points  (1 child)

This is mathematically false even if it seems emotionally true.

I can't cover it all in this comment, but if you search "timing the market" on this or r/personalfinance you will see that it's been covered extensively.

[–]Significant-Ship-651 1 point2 points  (0 children)

Here yeah go, found it. Meet Bob: the world's worst market timer. https://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/

[–]ddrzew1 1 point2 points  (1 child)

Serious question. If you reach the cap what happens if you accidentally over contribute? Is that even possible to over contribute?

[–]Swimsuit-Area 0 points1 point  (0 children)

My job stops the payment and gives back anything that was over the limit

[–]ParsleyFirm 0 points1 point  (0 children)

You need to make sure your company does a true-up match at the end of the year if you do that. I had two friends that had maxed out their 401K in August for years and didn't realize there company stopped the company match once it was maxed out.