Good idea to max out 401k in the first few months of year?

New / Eng MSFTE
Dec 31, 2018 83 Comments

I know that if you want to invest 19k in the market it's better to do dollar cost averaging and invest some monthly.

Is this the case for 401k or Roth as well, or the brokerage handles the investment strategy?

My brokerage is Fidelity, employer Microsoft.

Assuming I don't need cash immidiately.



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TOP 83 Comments
  • No. Bad. Bad. Bad.
    Dec 31, 2018 20
    • VMware / Product lRQQ72
      Most decent companies match on what is put in, at the time it is put in. (as shown in the replies). Do yes good idea to front load for many reasons, from leaving the company to prioritizing the best investment options...
      Jan 1, 2019
    • Salesforce 2438ez
      DuQv is neither dumb nor trying to fool you, judging from how many relevant and accurate posts he has made previously in the Money topic. It’s up to the company how to do matching. Some, like Microsoft it seems, match as you contribute. Some match a max per paycheck, and if you donated faster than that, they may match extra at the end of the year to give you the maximum match benefit as if you had contributed throughout the year instead. Some match a max per paycheck, and if you donate faster than that, too bad, you lose out on potential matching. DuQv was warning against this third type of match. If you’ve done your homework and know you’re not in the third group, feel free to frontload your contributions.
      Jan 3, 2019
  • Google / Eng poogers
    Yes. Good. Good. Good.
    Dec 31, 2018 2
    • Facebook haKI43
      This is the right advice. Lump sum historically outperforms dollar cost averaging and MSFT has ‘true up’ so no match will be wasted. Other guy has no idea what he’s talking about.
      Dec 31, 2018
    • Microsoft / Eng Tc292k
      Jan 1, 2019
  • Google Cmcnndns
    Don’t worry about it too much. Theoretically lump sum is expected to perform better because your employer match + your money sits in the market longer.

    I still chose to DCA it because the markets make me nervous right now.
    Dec 31, 2018 11
    • Oracle


      Google, Facebook, Instacart, Twitter, Uber, Air Asia, IBM, Cisco
      Really? Some dumbass declares a bottom and I'm the "dimwit" for doubting him? Good show, lad, carry on.
      Jan 2, 2019
    • Google / Mgmt Dian
      Of course you should doubt him. That's what I wrote if you read carefully.
      Jan 2, 2019
  • Microsoft unfanged
    Always max the 401k. You can then use this early money for ETF. But if you want to do average cost smoothing you can just buy some low risk interest bearing assets getting 2-3% and then convert to ETF monthly. Makes no sense to match 401k slowly, leaving money on the table.
    Dec 31, 2018 5
    • Google Cmcnndns
      Is there an easy way to do it other than defaulting all your contributions to the Vanguard money market fund and manually buying VTSAX or whatever later?
      Jan 1, 2019
    • Microsoft unfanged
      ETF is exchange traded fund, basically a way to buy a ‘stock’ of a market index like S&P 500.
      Jan 6, 2019
  • Bloomberg Terminal!
    Dollar cost averaging
    Dec 31, 2018 3
    • Intel superrr
      How can you move the money from money market to a 401k? The contributions should come from employer
      Dec 31, 2018
    • Microsoft / Eng bebK16
      Dollar cost averaging is provably worse than lump sum long term. DCA is a risk mitigation. If you're okay with the risk, you will get more reward.
      Jan 1, 2019
  • Amazon gVNd04
    Lump sum investing tends to perform slightly better (citation needed) because markets tend to go up more than down. Dollar averaging would be better if you're about to fall off a cliff. You can't predict the future. Dont over think it.
    Dec 31, 2018 1
    • Lump sum tends to be better, except when it isn't (right before a cliff). Depends on your risk appetite.
      Dec 31, 2018
  • Microsoft


    Good in that it gives you more time for growth, bad in that it doesn’t spread your investment over an even period of time. But as long as you’re making other investments and keeping them evenly spread out you should be fine
    Dec 31, 2018 0
  • If you switch jobs during the year and both employers match 401k, can you get max matching both times?
    Dec 31, 2018 8
    • Microsoft / Product

      Microsoft Product

      Bain & Company
      DuQv is spreading lies all over this post
      Jan 1, 2019
    • Editing my post above

      Your max applies to both pre and post tax. As noted by @prodacess

      I set the max for both employers to max employer match.

      And then *withdrew* the after-tax contribution by EOY. Though you have till 4/15 of the next year to do this.

      This preserves the employer contribution.

      I did not recharacterize because I also find a SEP IRA which provides a slightly better deal for business owners.
      Jan 1, 2019
  • Scientific Games objectis
    If you max out within first few months, you will not be able to get a company match for remaining of the months. At least thats how my employer does it.
    Jan 4, 2019 4
    • Microsoft lHcN54
      What months are you talking about? Microsoft doesn't restrict how much it matches per month. If you put all your $19k in January, it'll match $9500 in January.
      Other companies - yes, they restrict maximum match per month, so even if you maxed in January it will be able to match only up to some amount (for example, $1000).
      Jan 5, 2019
    • Microsoft / Eng Tier 1
      Wow that’s really dumb.
      Jan 5, 2019
  • Microsoft rocket
    Hard to predict the outcome ... it could be a Bad idea cause you are trying to time the market (assuming right now stock are cheapest). Spreading it evenly across the year provides better returns if the market corrects/crashes further and I think there is a likelihood of that happening this year.
    Dec 31, 2018 3
    • Microsoft rocket
      Depends on how the event unfold ... let’s assume Q1 is the highest point for the year 2019 followed by a shallow crash in H2 2019 then you will lose more then the person who has evenly spread. FYI ... this happened to me this year when I made a 50% contribution in my bonus paycheck that covered all my 401k and unfortunately September 15 was the peak for this year and when I look at my returns it’s -10% compared to my colleagues at -6% for the same fund(bitc life)
      Dec 31, 2018
    • Google / Eng

      Google Eng

      Top Contributor or GTFO
      What you are proposing is timing the market. If you think about how the market will trend over the next 6 months before investing in your 401k you are timing the market.
      Jan 1, 2019


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