I’ve always tried to “front load” my 401k contributions to reach the annual limit. By that I mean contributing comparatively more early in each year for about 3 months to get more money in the market sooner, and then dropping the contribution election down for the rest of the year.
The problem is trying to calculate exactly what the contributions should be for each month was always a headache and was usually more of an educated guess than a reliable calculation. The reason it gets complicated is because with most employers, you don’t want to reach the annual max prematurely during the year because then if you stop contributing, you lose the employer match for the rest of the year. That is, most employers will only offer the match on paychecks from which you also made a contribution, so you need to contribute from every paycheck each year. So it’s usually a bit of guessing and shooting a moving target trying to maximize your contributions, reaching the limit, while still maintaining the employer match through the end of the year.
After not being able to find any calculator or formula online for what I was looking for, I decided to sit down and create my own. This calculator tells you what percentage to set your contribution election at to “load” your 401k as much as possible over a time period you specify, e.g. 3 months. After that “loading period” you’ll drop your contribution election to the minimum required for your employer match, which will continue through the rest of the year while staying below or at the annual contribution limit. Even if you don’t want to front load, input 12 months and the calculator will tell you exactly what your contribution election should be to reach the maximum annual contribution.
This is the first iteration. I’m neither an Excel wizard nor a designer, so I’m sure this spreadsheet can easily be improved and can be made more visually appealing. It’s not perfect and it’s pretty crude, but it seems to get the job done for what I wanted out of it. Hopefully you find it useful. If you have any suggestions for obvious improvements, drop a comment and I’ll look into adding it. Click the links below for direct download.
Google Sheet (Make a copy to edit)
Instructions/Notes:
- Yellow cells denote inputs.
- Input your desired loading period in months, annual salary, expected bonus and percentage of bonus that will be contributed, minimum contribution percentage required for employer match, and the annual contribution limit.
- Blue and green cells denote outputs.
- Blue cells tell you what your paycheck percentage contribution election should be.
- Green cells tell you what the dollar amount contribution would be for that specific percentage election.
- The table shows values for titrating up or down.
- Remember to change your contribution election to the minimum required for your maximum employer match directly following your loading period.
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