Hit Your Quota, Max Out Your 401(k) … and Still Lose Thousands?
The High-Earner’s 401(k) Trap
In an uncertain economy, even top-performing sellers are anxious about their 2026 earnings. Yet, many of those same performers are also expecting significant commission or bonus checks early in the year—a well-earned reward for their 2025 performance.
How you manage that single windfall – specifically your 401(k) contribution – can have a surprisingly large impact on your total compensation by year’s end.
Let’s be clear: worrying about how to handle a six-figure bonus check is the definition of a “first-world problem.” It’s a position many would envy. Nevertheless, it’s a financial reality for many successful sales professionals – and getting it wrong means leaving a lot more free money on the table, so it’s worth paying attention to a potential hidden trap.
The Problem: The Per-Pay-Period Matching Trap
To attract top talent, many companies believe a great benefits package is table stakes – which nearly always includes a 401(k) match, often dollar-for-dollar up to a certain percentage of your pay.
Top sellers, aiming for the 2026 contribution limit (expected to be $24,500 for most sellers), see that big bonus check as a shortcut. The play is simple: log into the benefits portal, set the contribution rate to a massive percentage—30%, 50%, even 95%—and max out the entire year’s contribution with that one check.
On the surface, the logic is sound. “My 2026 pipeline could dry up,” the thinking goes, “or the company could restructure. I’ll use this 2025 bonus to fund my retirement now. I’ll get it out of the way, and then I can enjoy 100% of my paychecks for the rest of the year.”
Here’s the costly mistake: Most companies don’t calculate your match based on your annual contribution. They calculate it per-pay-period. And that leaves a lot of “matching money” uncollected.
Risks for High Earners with Consistent Pay
Let’s look at a sales leader, Alex, with the following profile for 2026:
- On-Target Earnings (OTE): $350,000
- Company Match: A 100% match on contributions up to 4% of salary.
- 2026 401(k) Limit (under 50): $24,500
Alex’s total potential match from the company is 4% of $350,000, which is $14,000. That’s a key part of the compensation plan.
But Alex is worried about market uncertainty and decides to max out early. He sets his 401(k) contribution at 34%, hoping to max out his contribution by the end of the first quarter. Here’s what happens:
- Paychecks 1-5: Alex is paid twice a month ($14,585 per check). $4,958.90 of each check goes to his 401k contribution, untill he reaches the max contribution for the year.
- How the match is paid: The company’s match is capped per-paycheck. If Alex is paid twice a month, the maximum match Alex can get on any single paycheck is 4% of each $14,583 check – or $583.40.
- Paychecks 6-24: By mid-March, Alex has fully-funded his 401(k) – so his contribution from each paycheck is now $0. And because the company’s match is contingent on a contribution, the company’s match for the rest of the year is also $0.
At the end of the year, Alex has only received the match for the first few pay periods (5 checks x $583.40 = $2,917). By maxing out early, Alex has forfeited $11,083 in potential matching funds.
Risks for High Earners with Lumpy Pay
For commission-based sellers, the same structural challenges can create problems. Let’s consider a seller, Amy, who had a great finish to 2025. She’s anticiapting a $50,000 check on January 15th that includes commissions and a SPIFF for being over 100% of her annual quota.
- On-Target Earnings (OTE): $350,000
- Company Match: A 100% match on contributions up to 4% of salary.
- 2026 401(k) Limit (under 50): $24,500
Like Alex, Amy’s total potential match from the company is 4% of $350,000 –$14,000. Knowing that a $50k check is coming her way, though, she sets her 401(k) contribution at 49%. Here’s what happens:
- Paychecks 1: 49% of $50,000 is contributed to Amy’s 401k plan. She has made her maximum contribution of $24,500 – and there’s another $25,500 in her paycheck!
- Company March: 4% of 50k = $2,000 with this paycheck.
- End of Year: Amy has forfeited $12,000 of additional potential match by maxing out early.
The “True-Up” Provision: Your Benefits Plan’s Fine Print
To avoid this situation, your company’s benefits plan might include “true-up” provision. But this sort of corner case is rare enough that a lot of smaller companies haven’t thought about it. The tools they use to process 401(k) matches don’t consider true-ups, and you’re left at risk.
A true-up is an end-of-year audit, where the company looks at your total annual salary and contribution, calculates the total match you should have received ($14,000 for Alex and Amy), and compares it to what you actually received ($2,917, and $2,000, respectively). If there’s a shortfall, they deposit the difference in a lump sum at the end of the year.
If your plan has a true-up, an early 401(k) witholding strategy works perfectly. You can max out early, and you’ll still get the full $14,000. But if it doesn’t, you lose.
Your 2026 Action Plan
Just like you’d review your commission plan at the start of the year, you need to review your 401(k) plan to understand its various nuances.
- Ask HR One Question: Send this email right now: “Does our 401(k) plan have an annual ‘true-up’ provision for employer matching contributions?”
- If the Answer is “YES”: You’re all set. You can max out your 401(k) as fast as you want (though see the note below on new Roth rules).
- If the Answer is “NO”: You must change your strategy. To get the full $14,000 match, you must contribute from every single paycheck for the entire year.
Here is the simple math to set your contribution rate:
Divide the 2026 401(k) Limit by your OTE. For Alex and Amy, this is:
$24,500 / $350,000 = 0.07
Their contribution rate should be 7.0%.
By setting their rate to 7%, they will contribute from every paycheck, capture their full 4% match on every paycheck, and hit the $24,500 annual limit at the end of December – assuming they’re still employes with this company and continuing to earn at this level.
A Quick Note for High Earners (Age 50+)
Starting in 2026, a new rule kicks in from the SECURE 2.0 Act. If your wages in the prior year (2025) were over $145,000, any “catch-up” contributions (the extra amount you can contribute if you’re 50 or older) must be made on a Roth (after-tax) basis. This doesn’t change the matching math, but it’s a critical new rule to be aware of as you plan.
Don’t Leave Commission on the Table
As a sales leader, you would never let your team walk away from a deal, leaving money on the table they didn’t need to. Don’t do it with your own compensation. Your employer match is the closest thing to a guaranteed, “closed-won” return in finance. Take 10 minutes, check your plan, and make sure you’re collecting all the earnings you’re entitled to.
