Annual match is the focus of this guide. If you contribute most of your 401(k) limit early in the year, a plan that matches each paycheck can stop matching once your contributions stop. A “true-up” is the plan feature that fixes that after year-end. Whether you keep a true-up after you leave depends on how your plan is written, so this post separates what the sources verify from what your plan document decides, then gives you steps that put you in control either way.
Annual match: How a True-Up Works
Newfront says an annual true-up makes sure each participant receives the full match for the plan year regardless of when during the year they deferred. After the plan year ends, the employer recalculates each participant’s match using the full year’s deferrals and pay, and if per-pay-period funding left someone short, the employer adds the difference. The true-up isn’t adjusted for investment gains or losses, and it must be a written plan provision applied to all eligible participants (Newfront).
SHRM describes the same idea: a true-up gives employees the full annual match even if they reach the IRS annual contribution limit before year-end, and the employer contributes any shortfall. It notes that many employers process true-ups after the plan year ends, while others make them during the year once an employee reaches the limit (SHRM).
Who Benefits
- People who front-load deferrals and could hit the IRS limit before the year ends (Newfront).
- People who defer nothing for part of the year and then catch up (Newfront).
- People who contribute from bonuses or join midyear, who SHRM says can receive the same annual match as those who contribute evenly (SHRM).
Two Examples With Numbers
First, a plan example adapted from Newfront. A calendar plan year, $100,000 salary, and a match of 50% of deferrals up to 6% of pay. Frank defers 6% all year and gets $3,000. Sarah defers nothing January through June and 12% July through December, so her annual deferrals are also $6,000. Without a true-up her match is 50% × 6% × $50,000 = $1,500. With a true-up, her annual rate is 6% and she receives $3,000, with $1,500 deposited after year-end (Newfront).
| Frank | Sarah, no true-up | Sarah, true-up | |
|---|---|---|---|
| Annual deferrals | $6,000 | $6,000 | $6,000 |
| Match | $3,000 | $1,500 | $3,000 |
Second, my own assumed numbers. Assume a $120,000 salary, a match of 5% of pay ($6,000 for the full year), and contributions that stop after seven months. If the match is calculated per paycheck, seven months of matching is $3,500, leaving a $2,500 shortfall for a true-up to cover. The example assumes your contributions exceed 5% of pay in every pay period.
The Even-Pace Rate for 2026: A Plan That Needs No True-Up
The IRS says the 2026 401(k) employee deferral limit is $24,500, and workers 50 and older can add a $8,000 catch-up, for $32,500 in total. Ages 60 to 63 have a special catch-up of $11,250 that replaces the $8,000 (IRS). Those numbers let you compute a rate that spreads contributions across the whole year, which captures a per-paycheck match without relying on a true-up.
Using the $120,000 salary from the second example: $24,500 ÷ 12 months = $2,041.67 a month, which is $2,041.67 ÷ $10,000 monthly pay = 20.4% of pay. Front-loading the same $24,500 into seven months would take $24,500 ÷ ($120,000 × 7 ÷ 12 = $70,000) = 35.0% of pay. In the 5%-of-pay match example, the even pace earns $6,000 of match in the year, while the seven-month front-load earns $3,500 from the per-paycheck formula and leaves the $2,500 shortfall for a true-up to cover. The rates are my arithmetic on assumed pay.
The same arithmetic works for the catch-up. A 55-year-old with the same pay who wants the full $32,500 would need $32,500 ÷ 12 = $2,708.33 a month, or 27.1% of pay, to stay even. A 61-year-old using the $11,250 special catch-up has a $35,750 limit and an even pace of $2,979.17 a month, or 29.8% of pay (IRS). Seeing the percentage first lets you set a single payroll deferral rate in January and skip the monthly decisions. If your plan does have a true-up, you can front-load without losing match; if you are unsure, the even-pace rate is the choice that works either way.
What Happens If You Leave
Newfront says an annual match funded after year-end may require employment on the last day of the plan year and/or a set number of hours, not to exceed 1,000. Per-pay-period matches shouldn’t carry these conditions, and safe harbor matches can’t have them (Newfront). It also explains why: depositing during the year could leave a terminated employee with match money that isn’t theirs (Newfront).
Plans differ. One university’s published FAQ says a participant who leaves service before the true-up is posted is still entitled to any true-up due, and that it is posted in the first quarter of the following year (University of Delaware). That is one plan, so it shows what is possible, not what yours does. SHRM’s article doesn’t address eligibility for former employees, so those details come from your plan document or administrator (SHRM).
Steps You Can Take
- Find out how your match is calculated. Newfront advises reviewing the plan’s match formula and notices to understand how and when the match is computed (Newfront).
- Ask whether there is a true-up. Ask whether the plan has one and whether it requires employment on the last day of the plan year.
- If there is no true-up, spread deferrals evenly. Newfront says this helps capture the full match (Newfront).
- If there is a true-up, timing matters less. Newfront says deferral timing matters less for match purposes, though understanding the provision still helps (Newfront).
- Before leaving mid-year, ask the administrator whether any true-up would still be paid to you. That is my suggestion.
My Take on 401(k) True-Up
- In my view, if you might leave your job this year, spreading contributions evenly across paychecks avoids depending on a true-up. That follows from the per-paycheck arithmetic above.
- In my view, the plan document is the place to find whether a true-up exists and whether it requires employment on a certain date, since the source says plans can set such conditions.
Sources
- Newfront: 401(k)ology, Annual match true-up
- SHRM: Consider 401(k) true-up payments for employer matching contributions
- University of Delaware: True match FAQ
- IRS: 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500
This article offers general information and my own opinions, not financial, tax, or legal advice. The figures in worked examples are assumed. Laws, tax rules, and products change and can differ by location, so check current official sources and talk to a qualified professional about your own situation.
Related reading: Only 5% of Active Funds Beat the Index” Is True and Also Misleading and 401k Vesting Cliff: Plan Your 2026 Job Move Around the Match.