Investing

One “silver lining” of a job layoff can be a temporary lower federal income tax bracket, said certified financial planner Jaime Quinones with Stockade Wealth Management.
That could offer tax planning opportunities, such as Roth individual retirement account conversions or the 0% capital gains bracket.
However, you should consider your financial goals and run tax projections for the year first.

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Weigh a Roth individual retirement account conversion

One strategy that’s more attractive in a lower-income year is Roth individual retirement account conversions, which transfer pretax or nondeductible IRA funds to a Roth IRA, according to CFP Catalina Franco‑Cicero, a wealth advisor with Tobias Financial Advisors in Plantation, Florida. 
“It’s not a free lunch” because you’ll still owe regular income taxes on the converted balance, she said. But your bill could be lower in a smaller tax bracket.

Converting funds to a Roth IRA “can be a great opportunity for tax-free growth and future tax-free distributions,” Franco‑Cicero said.
Of course, you don’t have to decide on the strategy immediately. You can wait until the end of the year approaches, she said. That way, you’ll have a better gauge of your projected income for 2024, she said.

Leverage the 0% capital gains bracket

If your income is low enough, you could leverage the 0% long-term capital gains tax bracket to rebalance a taxable portfolio or save on future taxes, experts say.
For 2024, you may qualify for the 0% long-term capital gains rate with taxable income of $47,025 or less for single filers and $94,050 or less for married couples filing jointly.

“The 0% bracket is actually pretty wide,” especially for married couples, Quinones said. “You could be six-figure earners and still fall into the 0% bracket.”
That’s because the bracket is based on taxable income, which is calculated by subtracting the greater of the standard or itemized deductions from your adjusted gross income.

One of the perks of the 0% bracket is a chance to reset an asset’s purchase price, or “basis,” by selling the asset and immediately repurchasing it. By resetting the basis, you can save on future capital gains, experts say.
However, you should run projections of your 2024 taxable income before harvesting gains.
You also need to consider long-term plans for the asset.
The strategy wouldn’t make sense for taxable assets you’re planning to leave to heirs because the assets will automatically get a stepped-up basis when you pass, Quinones explained.

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A feature of the Biden administration’s new income-driven repayment plan that will reduce millions of borrowers monthly payments kicks in on July 1.
Someone earning $125,000 will see their bill fall to $380 a month from $853, according to one analysis.
Here’s what else to know about the upcoming change.

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Your student loan bill may get smaller next month.
Here’s why: A feature of the Biden administration’s latest income-driven repayment plan that will reduce millions of borrowers’ monthly payments kicks in on July 1.

For some borrowers, “it’s a dramatic drop,” said higher education expert Mark Kantrowitz.
Last summer, President Joe Biden rolled out the new program, called the Saving on a Valuable Education, or SAVE, plan, describing it as “the most affordable student loan plan ever.” So far, around 8 million borrowers have signed up for SAVE, according to the White House.
Under IDR plans, borrowers pay a share of their discretionary income each month and receive forgiveness after a set period, typically 20 years or 25 years. SAVE replaced the U.S. Department of Education’s former REPAYE option, or Revised Pay As You Earn plan.

Some enrollees have already benefited from reduced bills because the SAVE plan increases a borrower’s income exempted from their payment calculation to 225% of the poverty line, up from 150% under REPAYE. As a result, single borrowers earning less than $33,900 or a family of four making less than $70,200 who are enrolled have seen their monthly bill fall to $0.
But the most generous provision of the program that will soon go into effect slashes the share of discretionary income borrowers have to pay toward their undergraduate student debt each month to 5% from 10%. (Parts of the plan went into effect at different times due to complicated rules around regulatory changes.)

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A person making roughly $50,000 a year with a previous student loan payment under REPAYE of around $228 will now have a monthly bill of $67, according to a calculation from Kantrowitz.
Meanwhile, someone earning $125,000 will see their bill fall to $380 from $853, he said.
(Under IDR plans, a borrowers’ monthly payment isn’t impacted by their loan balance, just the details of their plan and income.)

Reduced bill should be automatic

As long as you’re already enrolled in the SAVE plan, you should see the decrease automatically reflected in your July bill, Kantrowitz said.
Borrowers who have both undergraduate and graduate student loans will pay a weighted average of between 5% and 10% of their income, the Education Department says.

To qualify for a lower payment under the SAVE plan, your total debt will generally need to be greater than a third of your annual income, Kantrowitz said. Borrowers can apply for the program at Studentaid.gov.
Some borrowers, including those who borrowed $12,000 or less, will receive loan forgiveness in as few as 10 years under the plan. Any payments that have already been made under an existing IDR plan or the standard repayment plan will count toward the borrower’s timeline to relief.

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About 36% of surveyed Americans ranked real estate as the top long-term investment above stocks or mutual funds (22%), gold (18%) and savings accounts or certificates of deposits (13%), according to a recent study by Gallup, a global analytics and advisory firm. 
Real estate investment trusts can be a great way to start as they have a “low barrier to entry,” said Stacy Francis, a certified financial planner and president and CEO of Francis Financial in New York City.
An REIT is a publicly traded company that invests in different types of income-producing residential or commercial real estate.

Some Americans believe real estate is the best long-term investment. If you are among them, real estate investment trusts, or REITs, might be the easiest way to tap the market. 
About 36% of surveyed Americans ranked real estate as the top long-term investment, more than cited stocks or mutual funds (22%), gold (18%) and savings accounts or certificates of deposits (13%), according to a recent survey by Gallup, a global analytics and advisory firm. 

Fewer of the surveyed adults believe bonds and cryptocurrency are good investments for the long haul, at 4% and 3%, respectively, the report found.
The firm polled 1,001 U.S. adults through telephone interviews from April 1-22. 
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For those people who see long-term investment potential in real estate, REITs can be a great way to start as they have a “low barrier to entry,” said Stacy Francis, a certified financial planner and president and CEO of Francis Financial in New York City.
An REIT is a publicly traded company that invests in different types of income-producing residential or commercial real estate. In many cases, you can buy shares of publicly traded REITs like you would a stock, or shares of a REIT mutual fund or exchange-traded fund. REIT investors typically make money through dividend payments.

Some, “you can invest in for as little as $25,” said Francis, a CNBC Financial Advisor Council member.

‘No one gets super emotional about stocks’

Real estate is a popular investment option among some Americans because it can evoke emotion and feeling, unlike stocks and bonds, Francis said.
“No one gets super emotional about stocks,” she said. “But individuals definitely get emotional about real estate.” 
Some people see it as a legacy to give to their children.
“Instead of giving them a portfolio of stocks, I want to give them a house that is physical and they can use,” Francis said as an example.
But buying a property and becoming a landlord takes a significant investment of money and time, more so than other kinds of portfolio assets.
“It’s not easy being a landlord,” said CFP Kashif Ahmed, president of American Private Wealth in Bedford, Massachusetts. “There’s far more to it than just getting a monthly check.”
Once you buy a property and turn it into an investment, you have to manage the property, properly insure it and be able to service it.
Whether you do this yourself or have someone on your behalf take care of the property, it can cost money, Ahmed explained.

REITs can also offer opportunities for diversification. Depending on the company, you are exposed to hundreds or even thousands of different properties or regions, experts say.
You can also invest in different kinds of real estate properties, such as shopping malls, warehouses and office buildings. However, if you invest in a region or sector that experiences devaluations, that price decline will be reflected in your portfolio.
“If there’s a REIT and it’s investing in shopping malls across the country, and shopping malls are not doing well … you’re going to feel that,” Francis said. “You’re not going to be protected.”

How much real estate should be in your portfolio

D3sign | Moment | Getty Images

If you truly want to tap into the real estate market as a long-term investment, “really research on these funds,” Francis explained.
REITs should also contribute to the diversification of your portfolio, “they shouldn’t be all of it,” said Francis. Some advisors recommend REITs should take up no more than 25% of your portfolio, she said.
Be wary about how the REIT will affect your tax situation. REITs often pay out 90% or more of the profits in the form of dividends, which can be subject to ordinary income taxes, experts say.
“It’s as if those dividends came to you and your paycheck at work,” Francis said.
If you don’t need the additional income, try adding the REIT in a tax-sheltered account, such as an individual retirement account, Ahmed said.
“Asset location matters,” he added.

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Higher earners can significantly boost tax-free retirement savings with mega backdoor Roth conversions.
A mega backdoor Roth conversion involves after-tax 401(k) plan contributions, which are shifted to Roth accounts for future tax-free growth.
However, there are some common mistakes, according to financial advisors.

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Mega backdoor Roth conversions can significantly boost tax-free retirement savings — but this maneuver is not available for all investors and mistakes are common, experts say.
When investors make too much to save directly to a Roth individual retirement account, backdoor strategies can bypass the IRS income limits. A mega backdoor Roth conversion involves after-tax 401(k) contributions, which are shifted to Roth accounts.  

It is more generous than regular backdoor Roth conversions because after-tax contributions can exceed the yearly 401(k) deferral limit, which is $23,000 for investors under age 50. The full 401(k) limit is $69,000 for 2024, including employee deferrals, employer matches, profit sharing and other deposits.
Mega backdoor Roth conversions are “a great tool when used appropriately,” but you need to know your goals first, said certified financial planner Jamie Clark, founder of Ruby Pebble Financial Planning in Seattle.
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Here are some common mega backdoor Roth conversion mistakes and how to avoid them, according to experts. 

Failing to plan for shorter-term financial goals

While mega backdoor Roth conversions can be appealing, some workers focus on the strategy before they have enough cash reserves or brokerage account assets for shorter-term financial goals, Clark said.

Rather than making after-tax 401(k) contributions, you may need the funds to boost your emergency savings, buy a home, pay for a wedding, take a vacation or other priorities.

Missing out on ‘free money’

Before making after-tax 401(k) contributions, you need to consider the full plan limit and other deposits that may still come from your employer, experts say.
For example, many plans have a “true-up” feature, which deposits the rest of your employer match if you max out the plan early. You also could receive a bonus or profit sharing.

You always want to be aware of how much money your company is putting into your 401(k).

Tommy Lucas
Financial advisor at Moisand Fitzgerald Tamayo

“You always want to be aware of how much money your company is putting into your 401(k),” said Tommy Lucas, a CFP and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida.
For 2024, higher earners could hit the $69,000 plan limit with employee deferrals and after-tax 401(k) deposits. Without leaving space for the true-up or employer profit sharing, “you’re just missing out on free money,” he said.

Infrequently converting after-tax 401(k) contributions

Ideally, you want to convert after-tax 401(k) contributions to a Roth account before there is time for the deposits to grow. Otherwise, you will owe taxes on the earnings at the conversion.
However, “the mechanism for conversion can differ from company to company and plan to plan,” explained CFP Dan Galli, owner of Daniel J. Galli & Associates in Norwell, Massachusetts.
Before starting after-tax 401(k) contributions, you need to fully understand the process for converting the funds to a Roth account, he added.

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College graduates who recently received their diplomas may be dreading the next milestone: the start of their federal student loan payments.
Here’s what borrowers should know.

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College graduates who recently received their diplomas may be dreading the next milestone: the start of their federal student loan payments.
Each year, roughly 2 million people in the U.S. are awarded a bachelor’s degree, according to an analysis by higher education expert Mark Kantrowitz. Roughly 60%, or 1.2 million of those students, will also have student debt, he said.

Here’s what new college graduates should know about the loan bills.

Bill likely won’t be due for six months

In most cases, you likely won’t have to make your first student loan payment until six months after you graduate, thanks to the federal government’s grace period, Kantrowitz said. Those with federal Perkins Loans can get up to nine months, he added.
If your loans are subsidized, the government will pay the interest on your loans during that period, Kantrowitz said. Meanwhile, interest will accrue on unsubsidized loans.
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Some borrowers may miss their first payment due date after the grace period, Kantrowitz said. To avoid that, he recommends putting a reminder in your calendar for about two weeks before repayment starts.

Some people may want to sign up for automatic payments with their student loan servicer, which can lead to a small reduction of your interest rate in addition to reassurance that you won’t get dinged with a late payment. Before you do so, just make sure your monthly bill calculated by your lender is correct.

You’ll have options if you’re worried

“The best way to reduce stress about student debt is to educate yourself as to how the loans work,” said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit that helps borrowers navigate repayment.
Fortunately, the federal government has many options for borrowers worried about being able to afford their bill. Its income-driven repayment, or IDR, plans, for example, cap your monthly payment at a share of your discretionary income.
The Biden administration recently introduced a new IDR plan under which borrowers need to pay just 5% of their earnings after calculated expenses. That option is the Saving on a Valuable Education, or SAVE, plan.

To determine how much your monthly bill would be under different plans, use one of the calculators at Studentaid.gov or FreeStudentLoanAdvice.org.
“Borrowers should choose the repayment plan with the highest monthly payment they can afford,” Kantrowitz said. “This will pay off the debt quicker and reduce the total interest paid over the life of the loan.”

For those who need to prolong their grace period, there are deferments and forbearances, including ones for those who are unemployed or in an eligible graduate school fellowship. Just keep in mind that during some of these breaks, interest will accrue on your debt and you’ll face larger payments down the line.
Mayotte, of The Institute of Student Loan Advisors, also recommends that borrowers research whether they’re eligible for any forgiveness programs. The institute’s website, FreeStudentLoanAdvice.org, has a database of such opportunities, she said. More

Remote work surged in the early days of the Covid-19 pandemic.
The trend has staying power. Workers value working from home and companies profit from the arrangement.
One study found large U.S. firms use remote work as a scapegoat for poor financial performance.

Justin Paget | Digitalvision | Getty Images

The work-from-home trend is here to stay.
Many companies have continued to let employees work remotely for at least some of the workweek — four years on from the early days of the Covid-19 pandemic — due to the win-win nature of the arrangement: Remote work is more profitable for companies and highly valued by employees, according to labor economists.

While some companies have issued return-to-office mandates, they’re the exception. The five-day, in-office workweek is antiquated for a large share of workers, a relic of the pre-pandemic job market.

“Remote work is not going away,” said Nick Bloom, an economics professor at Stanford University who studies workplace management practices.
“In fact, if you look five years out, I think it will be higher than it is now,” he said.

One of the pandemic’s ‘most enduring legacies’

Working from home was relatively rare prior to 2020. At that time, less than 10% of paid workdays were from home, according to WFH Research.
The share swelled to more than 60% as Covid-19 lockdowns pushed people indoors, then gradually decreased as employers called workers back to the office, mostly just a few days a week in so-called hybrid arrangements.

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However, the number of days worked from home isn’t declining anymore; it has held steady since early 2023 at about 25%, more than triple the pre-Covid rate.
The rise of remote work “is probably going to be one of the most enduring legacies” of the pandemic-era U.S. labor market, said Nick Bunker, director of North American economic research at job site Indeed.
The days of full-time in-office work “are gone,” he said.

Why remote work has stuck

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Of course, about half of all jobs — like those in service, accommodation and retail — can’t be done from home at all, Bloom said.
Of those that can be worked from home — such as many finance and technology jobs, for example — about 41% are hybrid and 20% are fully remote.
Remote work is “highly profitable” for companies, which is primarily why the trend has stuck, Bloom said.
The big upside is it reduces employee turnover rate by about a third. That’s because workers value remote work, so they tend to quit less often, Bloom said.

Remote work is not going away.

Nick Bloom
economics professor at Stanford University

His research suggests workers value hybrid work about the same as an 8% raise. A return-to-office mandate would require a commensurate pay increase to avoid attrition, he said.
Companies don’t have to spend as much on hiring, recruitment and training if they lose staff less frequently, he said. One company told Bloom that it costs the firm about $20,000 each time a worker quits.
Employers can also cut costs via the need for less office space and can broaden their recruitment pool to all geographic areas of the U.S. — potentially to areas where the cost of living is lower and they may be able to pay lower relative wages, Bunker said.

‘Firms care about profits, not productivity’

In addition, hybrid work doesn’t appear to have any negative impact on workers’ productivity, Bloom said.
Ultimately, “firms care about profits, not productivity,” Bloom said. “What makes money in a capitalist economy tends to stick.”
About 8% of all online job postings in the U.S. advertised the role as remote or hybrid, according to Indeed data as of May 2024. While down from a pandemic-era peak of around 10% in early 2022, it’s still “far above” the roughly 2% to 2.5% before the pandemic, Bunker said.

That recent decline is partly attributable to a pullback in job ads among some struggling sectors such as software development that tend to advertise remote roles rather than a broad-based throttling back of remote-work opportunities by employers, Bunker said.
When people have the chance to work flexibly, 87% of them take the opportunity, according to a 2022 survey by the consulting firm McKinsey.
“Job seekers really want it,” and employers feel they need to offer the benefit to stay competitive, Bunker said.

Why some companies are forcing a return to office

Of course, not all firms allow employees to work from home: About 38% of employees who can do their jobs from home are required to work full-time in the office, according to WFH Research data as of May 2024.
Such employees tended to be older or work at older companies that were started decades ago, it found.
Many companies point to downsides to remote work, including a reduced ability to observe and monitor employees and reduced peer mentoring, cited by 45% and 42% of employers, respectively, according to a 2023 ZipRecruiter survey.
However, a January study from the University of Pittsburgh found that large U.S. companies imposing return-to-office mandates did so in order to “scapegoat” remote work for poor company performance — not because working full-time in the office boosted the firm’s values.
The study found “significant declines” in worker job satisfaction without a big change in financial performance or firm values.

But outside of “struggling” companies, it’s rare for employers to force people back to the office full-time. To that point, 90% of professionals and managers in the U.S. now work from home at least one day a week, he said.
In general, evidence suggests remote work benefits employees, firms and society at large, with advantages such as reducing pollution from commuting and letting parents spend more time with their kids, Bloom said.
“It’s like a triple win,” he said. “And it’s really hard to think of something [else] that is that beneficial.” More

Generation X often must manage financial commitments to adult children and aging parents, in addition to their own current needs and goals.
While this generation is experiencing peak incomes, they also have significant student loan debt, high debt in general and low confidence in their retirement prospects.
There are some steps you can take to ease your stress level and feel more financially secure.

Ippei Naoi | Moment | Getty Images

Generation X is known as the sandwich generation because they sit between having a combination of financial or emotional responsibility for adult children and aging parents — in addition to managing their own current lifestyle aspirations and securing their retirement future.
It’s a lot to deal with, and Gen X can struggle with juggling life and finances across multiple responsibilities.

But there are some steps Gen Xers can take to ease some of the stress and feel more financially secure:

Align your life and money with purpose, giving your money assignments you connect with.
Own your preferences for the life you want now and in your future retirement.
Find confidence in planning your finances with a professional.

These steps give you the confidence to feel more secure and bring soul to your finances. 

More from CNBC’s Advisor Council

Finances of ‘the forgotten generation’

Gen Xers have earned other nicknames, such as latchkey kids and the forgotten generation.
Because people in this generation typically experienced both parents working while they were young, they became familiar with coming home to empty houses and learning resiliency in their parents’ absence, sometimes feeling forgotten.
Meanwhile, there is great wealth transfer of up to $90 trillion coming from the baby boomers over the next 20 to 30 years, and fanfare is all about wealth for the millennials. Alas, the forgotten! In many families, the transfer must come through Gen X first.

Here’s the rub: Gen X is experiencing peak incomes — households age 44-54 (which encompasses much of this generation), have a median income of $101,500, the highest across all age groups, according to Statista.
But they also have average student loan debt of slightly more than $40,000, high debt in general and the least confidence in their retirement prospects. A 2023 Schroders report revealed 61% of Gen X don’t feel good about the prospects of achieving their dream retirement goals and 45% don’t have a retirement plan at all.

In a 2023 survey from Experian, Gen X respondents were most likely among the four adult generations to report experiencing financial trauma, which is emotional distress derived from objective and subjective traumatic events, past or present. Financial trauma shapes relationships with money that affect engagement, perspectives, and outcomes with finances.
About three-quarters (74%) of Gen X reported financial trauma, compared to 71% of millennials, 63% of boomers and  64% of Generation Z.
So how can Gen X feel more confident about their current and future finances?
While it may seem grim at times, first, give yourself grace. Second, Gen X must believe that they can secure their future selves without depriving their current selves. Smoothing the struggle of the juggle is knowing that with intentional financial life planning, the current and future lifestyle divide doesn’t have to be that way. It can be “and,” not “or.”
Here are some strategies that can help.

‘Catch up’ on your retirement savings

In more ways than one, there’s life after 50. For workers with access to a traditional or Roth 401(k) plan, in 2024, you can make employee-based contributions of $23,000. When you reach the age of 50 and older, you can make additional “catch-up” contributions of $7,500, bringing your total to $30,500.
To power-save, make additional after-tax contributions if your plan allows, which brings you up to as much as $69,000 for the year, or $76,500 with the catch-up.

Diversify your investment account balances

Employer-sponsored retirement accounts such as 401(k) plans or 403(b)s and individual retirement accounts have something in common: The word retirement is the account’s intended long-term goal. Many folks and advisors gripe that their money is “locked up” until the penalty-free withdrawal age of 59½.
For flexibility, consider partnering your tax-deferred investment accounts with taxable brokerage accounts that do not have an age penalty, only short- or long-term capital gains tax, with the preference being on the lower long-term tax rate.

Having account flexibility allows you to fund current needs and retirement simultaneously without income threshold restriction or penalty. Additionally, your assets in a taxable brokerage account receive a “step-up” in basis at death. This could lead to higher valuation and thus reduce capital gains tax for heirs. 

Set financial boundaries with family  

One key struggle of the sandwich generation juggle is permitting yourself to prioritize your self- and financial care while keeping aligned with your value system to care for your loved ones.
Sure, stay true to your cultures and values in wanting to provide financial help for your adult children and a community, cross-generational care approach to your aging parents. But you also need to be attentive to your own financial well-being.
It’s may be a cliche, but put your oxygen mask on first. Basically, find ways to secure your own issues before assisting others.
To that point, have life and money conversations with your adult children and aging parents about what help you can afford to offer.

Work with financial professionals 

Being latchkey kids and often feeling forgotten contribute to Gen X’s natural skepticism, lacking trust until proven or earned.
While 65% of affluent millennials trust financial advisors, somewhat fewer, 58%, of affluent Gen X feel the same way, according to Investopedia’s Affluent Millennial Investing Survey. Proven or earned trust shows up in Northwestern Mutual’s 2023 Planning & Progress Study, where 50% of Gen X say they value financial advisors with expertise they don’t have, and 58% point to an advisor’s track record of experience.
With Gen X, it’s particularly important to be connected with and thus understood by their advisor, and offered sound financial advice they can use.
Don’t focus on seeking financial advice. Instead, unlock a relationship with a financial professional by seeking a referral from a trusted source. Or take a trust-but-verify approach by leaning into professionals’ social imprint, expertise and services.
 — By Preston D. Cherry, a certified financial planner and the founder and president of Concurrent Financial Planning in Green Bay, Wisconsin. He is also a member of the CNBC Financial Advisor Council. More

If you max out your 401(k) early in the year, you could miss part of your employer match, experts say.
But some 401(k) plans offer a “true-up,” or additional deposit of the remaining employer match if you max out contributions before year-end.
You should review your plan documents before setting up 401(k) deferrals, especially if you want to front-load contributions.

Sally Anscombe | Moment | Getty Images

When saving for retirement, investing sooner typically boosts growth over time. But you can lose money by maxing out your 401(k) too early in the year — unless the plan has a special feature.
Most 401(k) plans offer an employer match, which uses a formula to deposit extra money into the account, based on your deferrals. Typically, you must contribute at least a certain percentage of income each paycheck to receive the year’s full employer match.

However, some 401(k) plans offer a “true-up,” or additional deposit of the remaining employer match, for employees who max out contributions before the end of the year.
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“It’s an awesome perk,” but not all 401(k) plans offer a true-up, said Tommy Lucas, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida.
To that point, roughly 67% of plans that offer matches more than annually had a true-up in 2022, according to the Plan Sponsor Council of America’s latest annual survey. It’s typically most common in bigger plans, experts say.

No true-up can be an ‘absolute nightmare’

When a 401(k) doesn’t have a true-up, “it’s an absolute nightmare” because employees can easily miss part of the company match, Lucas said. 

For example, let’s say you’re under age 50, making $200,000 per year, and your company offers a 5% 401(k) match without a true-up.
With 26 pay periods and a 20% contribution rate, you’ll reach the $23,000 employee deferral limit for 2024 after 15 paychecks and only receive about $5,800 of your employer match. 
In this scenario, you’d miss about $4,200 of your remaining 5% employer match by maxing out the plan early, according to Lucas. That missed $4,200 could be worth tens of thousands more in future growth.   
Typically, you can avoid the issue by equally spreading out contributions throughout the year, but you need to monitor changes, such as raises or bonuses, he said.

Review your summary plan description

Before setting your 401(k) deferrals, it’s important to know whether your plan has a true-up, experts say.
“That’s one of the things we investigate,” said CFP Dan Galli, owner of Daniel J. Galli & Associates in Norwell, Massachusetts.
Typically, the best place to look is the “contributions” section of your 401(k) summary plan description, which may or may not mention the feature, he said.
“It’s never going to say, ‘This plan does not have a true-up,'” Galli said. But you can double-check with your company’s human resources department to confirm, which may prompt the company to add a true-up feature in the future. More