Since I’ll be quitting my job this year, I want to take full advantage of my retirement accounts while I still can.

To do this, I’m bumping my contributions for the first part of the year so that I can max out my accounts as soon as possible.

This got me thinking about whether front-loading tax-advantaged accounts is a good thing to do every year.

There are a few reasons it likely is…

Stocks Go Up (Usually)

The S&P 500 has risen over 9.5% annually, on average, since 1928.

While it hasn’t been a steady march higher, the overwhelming trend is upwards so it is reasonable to assume that investing earlier in the year is better than investing later, since you’re more likely to capture a bigger piece of that upward movement (this is one of the main reasons lump-sum investing is better than dollar-cost averaging).

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Postpone Taxes Until Later in the Year

Another benefit of front-loading your retirement accounts is that you defer your taxes until later in the year.

If the majority of your pre-tax paycheck goes to tax-advantaged accounts, there’s very little income to tax so you don’t have to give the government as much of your money during the first part of the year (contributing to retirement accounts doesn’t affect your FICA taxes though so you’ll still have to pay the full amount for Social Security and Medicare each month).

You’ll end up paying the same in taxes by the end of the year but the money you save on taxes early in the year can be invested in your portfolio and can grow for you rather than for the government.

More Tax-Free Growth

Front-loading also shields more of your investment earnings from taxes, since you’ll get more of your money into tax-protected accounts sooner.

Leave Your Job

If you lose your job or decide to quit during the year and you haven’t front-loaded, you may not be able to max out your contributions for that year.

As I’ve shown previously, maxing out your retirement accounts can help you retire years earlier so front-loading helps ensure that you take full advantage of those accounts every year.

Final Savings Boost Before Retiring

If you’re like me and are preparing for your last year of full-time employment, it may be possible to eliminate all of your federal income taxes during your final year. If you calculate how many months it would take to max out your retirement accounts and then only work that many months during your final year, you could avoid federal income tax altogether.

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A Warning About Front-Loading

One caveat: You should talk to your HR department before front-loading any accounts that receive an employer match. Some employers only match a certain percentage when the employee also contributes the same amount. So it’s possible front-loading would stop you from obtaining an employer match during the final months of the year (which would be bad).

I luckily receive the same employer contribution whether I personally contribute or not, so I don’t need to worry about this, but you should check before changing your monthly contributions.

If you do need to contribute every month to receive the match, you could always front-load the bulk of your contributions but leave enough of your allowance to contribute the match percentage for the rest of the year (you’ll probably want to also leave a bit of room to account for any raises you may get during the year).


The benefits of front-loading are compelling so I plan to front-load my retirement accounts from now on.

What do you think? Will you start front-loading your tax-advantaged accounts? Is anyone out there already doing it?

Update: Front-loading has resulted in an additional 1.46% return after two years for the Optimized Guinea Pig in the Guinea Pig Experiment!

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153 comments for “Front-Loading

  1. SavvyFinancialLatina
    February 5, 2014 at 10:36 am

    Thanks for the article! I was recently discussing this with one of my colleagues and he had no idea. I’m considering doing this. Not sure if I will maximize in the first six months, but it’s definitely something I want to consider. Your article encouraged me to send an email to HR asking for the policy.

    • The Mad Fientist
      February 5, 2014 at 10:59 am

      My pleasure! I’m glad to hear the article spurred you into action. Hopefully your HR department gets back to you with some good news.

      • Dividend Growth Investor
        February 9, 2014 at 6:01 pm

        That is a great article MF. Back when I was starting my site in 2008, I compared results of dollar cost averaging my way into an S&P 500 fund evenly over 12 equal monthly contributions versus a one time lump sum investment on the first of the year. It turned out that between 1988 – 2007, it would have paid to front-load in each year, except for three ( sorry for the shameless plug by the way)

        Of course, the year 2008 strikes me as a poor year to have front loaded. It seems that an year such as 2008 would have tilted the weights towards DCA vs Front Loading for a 10 – 20 year of retirement contributions. Once again, do not let taxes be more important than the investment strategy.

        By the way really dig your articles. Keep up the good work!

        Dividend Growth Investor

        • The Mad Fientist
          February 11, 2014 at 10:20 am

          Thanks, DGI.

          Yes, I agree 2008 would have been a terrible year to front-load but 2009 would have been a great year for it! Since you can’t predict what the market is going to do in any given year, it makes sense to pick the method that has been shown to perform better over the long run (which is the lump-sum method).

          • Stuart @ Epic Quiver
            January 12, 2017 at 11:04 am

            This is a great idea, there is also the added benefit of learning how to live off a smaller paycheck early in the year so once you have maxed out your contribution and your paychecks increase, it will be easier to divert that money to after-tax investment accounts without thinking twice about it.

  2. J. Money
    February 5, 2014 at 10:43 am

    I think it’s a great idea, brotha. Did the same thing for 3 years straight (diverted the max allowed at 90%) to scoop up as much as I could early on in case something changed in the future. Like, our company nixing the match (we had 100% matching of 100% you put in to the legal limit – it was wild!) or before I either left or got laid off. Which, as timing would have it, ended up being on the same day! I went to put in my two weeks notice and I got laid off before I could mutter the words!

    So a great idea if you can swing it, in my opinion. Especially knowing the path you’re setting up for yourself.

    • The Mad Fientist
      February 5, 2014 at 11:12 am

      Nice! It’s awesome to hear a real-life story of front-loading paying off in such a big way. I imagine you would have been really kicking yourself had you left any of that 100% match on the table when you quit/got laid off.

      My current employer offered a 100% match for the first $3K, so I maxed that out immediately, but sadly now I only get a 5% contribution (which is still pretty good but looks really stingy compared to your 100% match).

      • Robbie Brownell
        August 19, 2017 at 7:48 pm

        I’m starting a new career in finance. Can you send me any more info on front load IRA’s. Thanks

  3. Justin @ Root of Good
    February 5, 2014 at 11:07 am

    I wish I would have front-loaded more, but didn’t do it because I was lazy about cash flow management. I wanted a steady paycheck instead of tiny ones the first months of the year and big ones later. I also figured it might screw up my withholdings toward the end of the year and the employer would over-withhold, meaning the government gets a free loan for six months or so. Perhaps that would have been counteracted by not having anything withheld the first few months of the year.

    I did miss out on $10k of tax deferral in 2013 when my job suddenly ended and I didn’t get a chance to max out my 401k and 457. That kind of sucks knowing I lost out on potentially $3000-4000 of tax liability that I wouldn’t otherwise pay ever. Or at least not for a few decades.

    Oh well, lessons learned if I ever return to work full time, right? :)

    • The Mad Fientist
      February 5, 2014 at 11:25 am

      Yeah, I was interested in seeing how the withholdings would adjust after updating my contributions. Based on my most recent pay stub, it looks like they are computing things intelligently so hopefully they’ll do a good job adjusting again once I stop my contributions.

      I wouldn’t beat yourself up too hard over the $3K-$4K…it looks like everything turned out okay for you in the end :)

      • Justin @ Root of Good
        February 5, 2014 at 3:47 pm

        Sure it’s all fine and dandy but $3k is like 1 month’s living expenses! :)

        Hmmm, maybe I should max out my $11k of IRA’s for Mrs. Root of Good and myself. That would eat up most cash on hand or I could sell $11k in taxable accounts. Maybe I can tax loss harvest some of the $11k from taxable AND get an $11k deduction for contributing to an IRA. That’s like a double middle finger to Uncle Sam, right? Bwahahahaha

        • The Mad Fientist
          February 5, 2014 at 9:32 pm

          Haha, whatever you decide to do, I want to see a post about it and the image you use for the post better contain a two-finger salute!

          • Justin @ Root of Good
            February 6, 2014 at 9:46 am

            My last post on “paying $150 taxes on $150k income” features a nice portrait of a duck’s ass sticking up out of the water. I’ll have to step it up to some dual middle fingers on my next tax-related post. :)

  4. jlcollinsnh
    February 5, 2014 at 11:33 am

    Man, where were you when I was still working and had things like 401Ks? :)

    Great strategy.

    And if you think this has your HR dept wondering about you, just wait till you quit.

    “No. No problem. It has been great working here. But you know I just turned 32 and that’s already well past my full retirement age…”

    • The Mad Fientist
      February 5, 2014 at 7:20 pm

      Based on how long you’ve been the king of early retirement for, I imagine I was probably still in middle school :)

      Haha, I didn’t even think about talking to HR about leaving. I’ll likely just say I’m moving on to better things to avoid an awkward conversation.

      By the way, thank you for letting me bounce some of these ideas off of you before publishing the post. I had thought about mentioning your assistance in the post but since you ended your last email with, “If I turn out to be wrong, I’ll visit you in jail”, I didn’t want to scare anyone away!

      • jlcollinsnh
        February 5, 2014 at 11:35 pm

        good move.

        there are only so many people I can visit in jail.

  5. Dave @ The New York Budget
    February 5, 2014 at 11:49 am

    This is a great strategy – one I had been contemplating for a while and I think I will go ahead and start. My employer contribution IS dependent on mine, so I will front load the majority and then just do 6% for the remainder of the year.

    • The Mad Fientist
      February 5, 2014 at 7:22 pm

      Rememberer to leave a little wiggle room for the inevitable raises a smart guy like yourself is bound to get over the course of the year!

      • Sid
        October 19, 2015 at 10:45 pm

        Hey there – just starting my journey to FI and looking to front-load my 401k (employer match at 6%) in 2016. What would you recommend for the contribution percentage in the remaining months after my “front-loading contributions” in order to account for raises/promotions during the year? I was planning on doing 10% to be safe.

        • Eric
          May 6, 2016 at 3:31 pm

          A little late to the party – but what I did this year was prior to bonus being paid out, crank up my contribution to the max (75% for me). The next pay period included my raise, so I could calculate how many pay periods at 75% would get me to the max. Unfortunately, my employer only matches per paycheck, so I crank it down to the minimum required to get the full match for the rest of the year (staying under the 18k limit). Hope that helps

  6. TJ Schimmel
    February 5, 2014 at 1:07 pm

    I just fell into this strategy because last year i increased my contribution to 50% for my last 2 pay periods in 2013 in order to reach my maximum allowable contribution for the year, and just left it at this rate. I just got a reply from HR this morning that my company will only match what I put in, but they have a “true up” policy in the plan, where they review your contribution for the past year, and will make the full match by March 15th. I’m not sure if the benefits of front loading everything early will out weigh not getting the rest of my 2% match until March 15th of the following year.

    • The Mad Fientist
      February 5, 2014 at 8:36 pm

      Yeah, you can front-load a true-up policy but that is disappointing you have to wait longer to receive the match. You should definitely run some numbers to make sure front-loading doesn’t make you worse off.

      • Brian Allen
        February 8, 2014 at 10:03 pm

        You can actually wait lonelier than March 15th as the company can file an extension and delay their contribution until September. My employer does than as standard practice for their taxes thus delaying their 15% contribution to the 401k

        • The Mad Fientist
          February 11, 2014 at 10:21 am

          Oh man, that’s even worse!

          • matt22207
            April 3, 2016 at 7:36 pm

            Well, I messed this up bad! I checked with HR first, but didn’t understand their reply properly. I confused what they said when I asked them if they would still match 50% of a higher front-loaded contribution (up to 3% of my yearly salary) :

            “The company match is not 50% of whatever you put in, the company match is 50 cents on the dollar for the first 6% in contributions. This means, if you contribute 6% or more, the maximum percent of match is 3%. The match happens every time you contribute up to the IRS limit of $18,000. If you hit this 18k max early in the year, there is a true up that occurs the following fall of that year to true you up for any missed match.”

            Since this says “the first 6% in contributions”, this implied to me that I could front-load and they would still match half until I hit 6% of my yearly salary in contributions. However it was not clear to me that the 3% max is actually PER PAYCHECK. I ran through a couple scenarios with them, and finally got them to clarify the max was per paycheck, essentially turning this into what I thought was a flat 3% no matter how much more I contributed. So I convinced myself that if I were to go higher than 6% their statement meant: “The match is not a % of what you contribute, but a flat 3% per paycheck unless I hit the IRS limit”. Oops.

            So I front-loaded my contribution at a higher rate per paycheck, and stopped my contributions when it hit about $17k in April so that I would stay under the $18k IRS limit and avoid the true-up policy. I thought I would still get the flat 3% each paycheck after, but missed the “every time you contribute” part, so as soon as I stopped my own contributions they stopped matching. Big Oops.

            So I guess I’m stuck with the true-up and I may as well turn it back on now at 6%, which will auto-stop after the remaining $1k when I hit the $18k IRS limit, leaving me with only $500 more match possible, and about $4k match lost until the true-up.

            … AND.. According to them, “the true up happens in the fall the following year. This year [2016] will be trued up in fall 2017 if you are still employed here”. Damn. AND.. They are “required to do discrimination testing to ensure our plans do not favor highly compensated employees. I’m not sure of the threshold for the testing, but some highly compensated employees are effected by it which lowers or wipes out any true up money”. Assuming the “highly compensated employee” threshold is $115,000/yr salary (which I’m over), I might not get anything back. Guess we’ll see.

            Well, that was an expensive lesson to learn. Next year, I make sure I have 6% for the entire year (so I get the 3% per paycheck all year) and try to front-load anything over 6% that get my just under the $18k.

    • Jolly
      October 5, 2015 at 3:29 pm

      Yeah, my employer does the same true-up. Unsure if that applies if you leave the company half way through though!

      • Lars
        January 23, 2017 at 2:18 am

        Companies usually have a date you must still be employed – e.g. up to Dec 14th of the Calendar Year in which you make your contributions which basically means that you stay employed until the end of the year or if you get laid off or fired and are over 55 then they will pay you. Highly compensated usually is 120K but I have not ever had this rule impact my true ups.

  7. Dan
    February 5, 2014 at 1:15 pm

    Great article. Being the young investor that I am, I’d love to use this strategy. How do you handle the tiny paychecks for the first few months? Use your savings until you get over the hump and replenish it later in the year? Thanks, Dan

    • The Mad Fientist
      February 5, 2014 at 8:48 pm

      Great question, Dan. Right now, I’m actually sitting on too much cash so I’ll be living off of that while I front-load my retirement accounts. If I didn’t have cash set aside though, I’d probably live off of my wages and then funnel everything that’s left over into my retirement accounts (so rather than invest some in a taxable account and some in a tax-advantaged account, I’d spend the first part of the year maxing out my tax-advantaged accounts and then start focusing on my taxable accounts later).

      If you are just getting started though, you’ll want to make sure you’re not spreading yourself too thin so you may want to wait until you have accessible money in other places to fall back on if you need to.

      Thanks for the question!

  8. Rob
    February 5, 2014 at 1:20 pm

    I “front-load” mine and my wife’s IRA (when I have the money). If I put the max in at the beginning of the year I get up to 15-months extra growth (as opposed to waiting until April 15th of the following year)

    • The Mad Fientist
      February 5, 2014 at 8:51 pm

      Great point, Rob. Front-loading your IRA is an excellent idea for the exact reason you mentioned; an extra 15 months in the market could make a huge difference!

      • Michael
        May 11, 2022 at 8:45 pm

        A word of warning to anyone considering front-loading an IRA: I thought I was making a great choice when I decided to front-load my IRA with the maximum dollar amount the IRS allows. But, unexpectedly, I ended up making enough money that calendar year to put me in the “phase out” range of income (where the IRS allows you to contribute some money to an IRA but not to up to the maximum). As a result, I had to withdraw the “over-contribution” and earnings and go through a HUGE headache (which I will spare you the details on) when doing my taxes.

        So, if you’re considering this strategy, just be sure that you check the phase out income ranges for IRAs! This only applies to people making a lot more money than most, but if you’re above or even near the lower threshold where the phase out range begins (or your work/pay is highly variable), I would advise waiting to contribute to your IRA until you’ve filed your taxes and know your exact income.

  9. Jeff
    February 5, 2014 at 1:28 pm

    Timely article! My wife and I are both doing this right now as well. You should have seen the look on my HR contact’s face when she saw how excited I was to draw a zero dollar paycheck (I also max out ESPP, so I end up taking home virtually zero for a few months with all of my deductions). I also have the advantage of being able to put the money into a self-directed 401K (I feel like I’m one of 3 people in my company that take advantage of this option). I can put the money into a fine selection of fee free traded Vanguard ETFs. I’m also tempted to extend my jump off point a few months into next year solely to front load. I think it’s a great strategy!

    • The Mad Fientist
      February 5, 2014 at 9:00 pm

      Haha, I bet she’s never seen someone excited about having no take-home pay.

      I just spoke to an HR woman yesterday because I was trying to get into our 457(b) plan and I could hear the confusion in her voice when she saw how much I was already contributing to my retirement accounts. She was probably thinking, “Why does this 30-something want another retirement account when he’s already contributing so much money to the ones he’s already got?!”

      If you’re confusing your HR department, you’re probably on the right track!

      • Nick
        February 11, 2014 at 9:28 am

        Great post as usual. Where you able to get into the 457 plan? Hope you’re doing well.

        • The Mad Fientist
          February 11, 2014 at 10:38 am

          Hey, good to hear from you again, Nick!

          Sadly, I wasn’t able to get into the 457 plan because my salary doesn’t exceed the minimum threshold. I was really hoping to get another $17,500 of tax-free savings but the HR department shot me down :(

          • Nick
            February 11, 2014 at 4:55 pm

            Darn! Well, maybe the IRA will work for you. Even if you don’t have enough income left, you could still be okay as long as your wife has enough income in 2014 via the spousal IRA rule. Hope that works for you! Good hearing from you!

          • The Mad Fientist
            February 11, 2014 at 8:22 pm

            I’ll have plenty of income for an IRA but for some reason, my employer only allows employees who earned over 125% of the Social Security tax wage base during the previous year to contribute to a 457(b) plan. Have you heard of this before, Nick?

          • Nick
            February 11, 2014 at 10:20 pm

            I have not come across that rule before. Interesting. Getting excited for retirement?!

          • The Mad Fientist
            February 12, 2014 at 9:33 am

            I’ll probably try out semiretirement for a while to smooth the transition a bit but to be honest, I’m so busy right now with finishing my master’s thesis, getting the house ready to sell, working, and doing Mad Fientist things that all of these big impending changes don’t seem real yet.

            Once I get the bulk of my thesis done though, I think I’ll then start getting a lot more exciting about everything.

            Great hearing from you again and I hope you’ve been doing well!

          • Mary
            March 2, 2015 at 10:21 pm

            You were wondering why HR shot you down… Check out which has a little info about 457(b) plans at private tax-exempt organizations (which I’m guessing is where you are). Our 457(b) plan is really limited, only the President and the VPs are let in. I’m sure each employer applies its own limits to its own plan.

  10. Alexis
    February 5, 2014 at 3:41 pm

    I absolutely front load my contributions with my bonus in January. It works out really well because it actually makes my cash flow more steady. Although, stocks dropped a couple percent right after I contributed, and that kind of sucked. Oh well, it all balances out.

    • The Mad Fientist
      February 5, 2014 at 9:12 pm

      That’s cool front-loading actually helps smooth out your cash flows. That’s definitely not the case for most people!

      Don’t worry about the drop; drops are natural but luckily increases are more natural over the long run!

  11. Mrs. PoP
    February 5, 2014 at 7:10 pm

    I scheduled ours to front load a bit this year but not too extremely as I wanted them to finish funding in September or October. Actually, thanks to a pretty high income month we’re actually already 25% of the way to maxing them out.

    • The Mad Fientist
      February 5, 2014 at 9:20 pm

      What’s happening in September or October, Mrs. PoP? Are you making sure you have a lot of cash on hand so that you can go wild in New Orleans? ;)

      • Mrs PoP
        February 6, 2014 at 2:22 pm

        A mix of reasons, really.

        On my end, I got a raise that by not changing the percentage of withholding adjusted the fill-up date to a few months earlier. And since our expensive months fall at the end of the year (property taxes for multiple properties and insurance and other annual rental expenses), it seemed like an easy way to ensure plenty of extra cash flow in those months for those purposes.

        For Mr PoP, we changed his more intentionally to reflect more of a “worst case” income scenario. Though he has outperformed his peers the last few years, the target income for his position is actually a good deal lower than his earnings. So we adjusted his withholding so that even if he only earns target he will still max out. (Changes to his percentage of withholding can take a couple of months to go into effect, so it’s not something that we can do easily – especially when he often only has about 1 month of lead time in being able to estimate his next paycheck.)

        Not sure if New Orleans is going to happen this year… there’s a chance we might have to go to Guatemala for a wedding then, but we don’t know yet since the dude hasn’t yet proposed!

        • The Mad Fientist
          February 7, 2014 at 1:07 pm

          Congrats on the raise!

          Hopefully the wedding guy drags his feet a bit more so you can make it to FinCon and then go to the wedding afterwards. If memory serves me, I believe you promised me a beer so you may have to come to New Orleans no matter what :)

  12. First Timeinist
    February 5, 2014 at 8:47 pm

    This is such a great idea. Alternatively, I only worked a tiny part of last year, but invested nearly every dollar of it into an IRA. (Made around 7k, maxed the IRA) This means a full year more of tax sheltered income for what amounted to 2 months of work. Not applicable to most, sure, but I’m sure I’m not the only one who has encountered that situation!

    • The Mad Fientist
      February 5, 2014 at 10:00 pm

      Haha, I just got the “Timeinist” part of your name (it took me a lot longer than it should have)! Very nice!

      • First Timeinist
        February 5, 2014 at 11:43 pm

        In retrospect, probably should have been First Timentist. But didn’t roll of the mental tongue as well. Found your blog a few weeks ago and have been loving it so far! Been researching (and implementing 70% savings) FI and ER for the past 4 months, since I got my first job out of college. Really loving the movement. But sometimes I get super paranoid that you, MMM, jlcollinsnh, and Vanguard are all in cahoots!

        • The Mad Fientist
          February 7, 2014 at 1:08 pm

          Glad you’ve been enjoying the blog so far!

          That’s great you are able to hit a 70% savings rate right out of college. You are going to be financially independent in no time.

          Haha, I can promise that none of us are in cahoots with Vanguard, although if you know of a way that we could get in with them, definitely let me know because it’d be nice to get a few bucks for sending all of these people their way, haha.

  13. Garrett
    February 6, 2014 at 7:07 am

    This is something that I’ve been thinking about a lot recently. Right now I’m saving for the down payment on a house, so I’ve got my 401(k) set to get the 5% match from my employer. After that, I want to bump it up significantly to try and front-load as much as possible.

    Unfortunately, I have very irregular income. Paychecks can vary as much as $100-250, depending on how much overtime I work. My work only allows me to change my contribution % at 4 set times per year (each quarter), so I really don’t know how I’m going to set it up to reach $17,500 without going over.

    What happens if I set it too high and go over $17,500? Is my employer required to just stop paying into it, or will they overpay and trigger penalties? I need to talk to my HR person.

    • Chris @ Flipping A Dollar
      February 6, 2014 at 1:01 pm

      My company’s system lets me check a box that says “stop contributing once you hit the maximum allowed.” I check that box even though I’m not able to fully contribute yet. Check if yours has that, and if not, HR should be able to help you.

    • The Mad Fientist
      February 7, 2014 at 1:10 pm

      Yeah, just talk to your HR department and I’m sure they’d be able to help you. If it looks like it will be too much hassle, I probably wouldn’t worry about it and would instead focus my attention elsewhere.

  14. Done by Forty
    February 6, 2014 at 9:07 am

    Great points and something I hadn’t really considered doing. My company will match as long as I put 6% throughout the year, but as you noted there is a way to still frontload quite a bit, and still get the match. Our contributions have to be made as whole percentages of salary though, so I have to be careful not to end up under-contributing if I go this route, or accidentally leaving money on the table.

    • The Mad Fientist
      February 7, 2014 at 1:14 pm

      Yeah, you definitely don’t want to leave any money on the table!

  15. Chris @ Flipping A Dollar
    February 6, 2014 at 1:00 pm

    My company only matches up to 4.5% as long as I have a contribution of 6%. Front loading would make me miss out on this contribution! The only thing is that my industry (and company specifically) seems to be in a very tenuous state, so I’d hate to get laid off and know that I left money on the table. Granted, if I was laid off, not sure if 401k contributions would be on the forefront of my mind.. might be more worried about interviews!

    • The Mad Fientist
      February 7, 2014 at 1:23 pm

      You could front-load but you’d just have to make sure you leave enough so that you can contribute at least 6% for the rest of the year.

      Definitely don’t front-load though if you think you’ll need the cash if you get laid off!

  16. Ed Mills
    February 6, 2014 at 1:22 pm

    Front loading was one of the keys to our savings success. Every January and February we use to divert entire checks to our 457 and 403b accounts. Then, we would max out our accounts over the following 10 months. I love front loading because it allows you to maximize savings through aggressive tax avoidance. It’s always nice to see most of your salary ending up on your side of the ledger.

    These days it’s 100% front loading 100% of the time. Anytime we work we shovel our salaries to the following accounts: 457, 403b, IRA, HSA and our son’s ESA. Front loading is awesome because it is a “pay yourself first” method to the extreme. PYFX!

    Mad Fientist, I hope you’re feeling better after your surgery and good luck on that thesis.


    • The Mad Fientist
      February 7, 2014 at 1:28 pm

      Nice to hear from you again, Ed!

      “It’s always nice to see most of your salary ending up on your side of the ledger.” – Couldn’t agree more. Seeing all of your money go toward your savings provides such a nice psychological boost to start the year and makes you want to save even more throughout the year.

      Haha, PYFX…I need to get a t-shirt with that on the front and then a middle finger to Uncle Sam on the back.

      I am feeling great after the surgery, thanks! I actually felt completely back to normal 4 weeks afterwards and except for a tiny scare (I collided with someone while playing ice hockey and had some weird swelling that made me think my intestines were popping out of my stomach), I’ve been completely back to normal for some time now.

      My thesis, on the otherhand :( I have to have a polished draft finished in less than a month and I have a LOT of work still to do. It’s not going to be a fun month.

  17. Joe
    February 7, 2014 at 11:40 am

    Quite a while ago, I had a conversation with a coworker who told me he had invested too much too fast and I didn’t know what he meant, but he pointed out that he maxed out before the end of the year and thus didn’t get the company match for the last month or so. I realized I had done that at least once too. At any rate, keep that in mind when front-loading, make sure you don’t max out before the end of the year in order to get the full company max.

    • The Mad Fientist
      February 7, 2014 at 1:29 pm

      Yeah, I mentioned that in the Employer Match section in the article. The last thing you want to do is leave free employer money on the table!

  18. CT
    February 7, 2014 at 11:12 pm

    I would agree in part with front loading lump sums. I think that it would depend on how much you are planning to save each year and how old you are. For instance if you are a little older and have a sizable portfolio, you may not have enough years between retirement and social security to convert to Roth IRA. Also include if you are saving after tax money beyond pre tax contributions. Because you can front load that money too and also have access to money with low or no tax implications. Just thoughts, not for or against. Frankly, if you invest any amount at the right time you will make more money! Just knowing that time is key. DCA can smooth out your average cost basis if the market takes a turn for the worst.

    • The Mad Fientist
      February 11, 2014 at 10:03 am

      If you know how to time the market in a consistent manner, none of this stuff matters because you’re already ridiculously rich! Sadly, market timing is a loser’s game so you’re better off just investing your money as soon as it becomes available. While I agree DCA will smooth out your averages cost basis, it is still a suboptimal strategy for lump sums (see the article I linked to in the post for some reasons why).

  19. Elizabeth
    February 8, 2014 at 1:22 pm

    Sounds like you have a very lenient HR policy. I would love to do this so it would be one less thing to think about. Plus, it allows you to get your tax sheltering in just in case something happens throughout the year.

    My husband’s max % is already set at 15%, which we will have to pull back later in the year to make sure he still gets the match. Luckily, the 15% still allows him to max out the 401k @ $17,500, but I feel bad for others that might not make as much…they don’t even have that option to reach $17,500 since the employer max allows 15% per paycheck.

    For me, I took your advice and decided to go from 21% to 50% (my employer’s max) for the next couple months, rather than spreading it out all year. Unfortunately, as others mentioned, I still have to contribute to get my employer’s generous full on 5%, so I will ease up shortly to ensure my Dec 31 paycheck is the one that maxes it out.

    I wish we could do IRA’s already for 2014, but I need to wait and see how a few scenarios unravel this year to determine if only I can do a traditional non-deductible IRA or if we both can do Roth IRA’s. Otherwise, we get into messy re-characterization issues like the one I am dealing with for 2013 taxes.

    • The Mad Fientist
      February 11, 2014 at 10:05 am

      That’s crazy your husband’s employer restricts some people from maxing out their 401(k)s. I wonder what the reasoning is behind the 15% max?

      I feel your pain with the IRAs. I’d love to be able to max out my 2014 IRA now too but I’m not sure how much income I’ll have so I’ll just have to wait, sadly.

  20. Reepekg
    February 9, 2014 at 11:35 am

    I definitely do this to optimize returns. It is a huge PITA because my employer matches 70% of my contribution up to 10% of salary per pay period… so I have to calculate that distributed across the year to get it, and then front load the difference. And of course you can’t front load $x, you have to calculate it as a percentage of pay up to a max of 25% of pay per period. Lame. I would love a $0 paycheck.

    I also buy the max amount of I bonds and max the IRAs in January.

    • The Mad Fientist
      February 11, 2014 at 10:09 am

      Haha, only in the FI community would you see, “I would love a $0 paycheck” :)

  21. Refinerr
    February 9, 2014 at 1:40 pm

    Thanks for another great article! I hadn’t heard of this concept until I read this but I’m pretty new to the FI world. I understand the principle of getting into the market ASAP so this makes perfect sense and aligns with our strategy. I’m not sure we have the emergency funds right now to do this but I did adjust my other savings accounts to get enough to max our Roth IRA now instead of later so I was able to put it into use in a different area!

    Once I’ve got a little more flexibility in our living expenses I’m going to try this out on our 401k. We get a 4% match which I’m grateful for but I’ll make sure to check with our HR first. Thanks again!

    • The Mad Fientist
      February 11, 2014 at 10:10 am

      My pleasure, Refinerr! Thanks for stopping by!

  22. Jeremy @ Go Curry Cracker!
    February 10, 2014 at 3:46 am

    I always front-loaded my 401k contributions just to have the $ in the market longer. The only reason I could think of for not doing it was that I got pay raises in September, and would have had a larger match overall if I could back-load it.

    • The Mad Fientist
      February 11, 2014 at 10:24 am

      Hey Jeremy, great point about mid-year raises. That is definitely another thing people should consider before deciding to front-load.

      • Dan
        December 18, 2015 at 6:20 pm

        Was going to make this same comment so glad I made it through reading all these to find it already called out! Our raises/bonus usually take effect in April so im tempted to think it would be better to start aggressive front loading then, but would be interesting exercise to evaluate it for a couple of years looking back and comparing increase/decrease of market over those four months vs additional match value post raise.

        Random aside.. when I got my first job that offered 401k it just so happened to start at exact bottom of 2008 market values and I was lucky enough (before knowing about these FI blogs) to set employer max of 80% of my check towards it for 4-5 months. My salary was pretty tiny at that point, haha but not much can do about that. Even for people who don’t front load it may be worth considering going big during an especially big market downturn, I know seeing big declines over last few days it got me thinking of great opportunity from 2008!!

      • Dan
        December 19, 2015 at 12:55 pm

        2008 should read 2009, i’m not very good with dates!

  23. Paula / Afford Anything
    February 10, 2014 at 12:56 pm

    Hooray for front-loading!! Keep the money in the market longer, enjoy bigger gains, and quit that day job. :-)

    • The Mad Fientist
      February 11, 2014 at 10:26 am

      Almost there, Paula! By the time you see me in New Orleans, that whole “day job” problem should be a thing of the past!

  24. Simon Kenton
    February 15, 2014 at 7:39 pm

    I used to advise a former girlfriend on her finances and taxes – I got her to doing this. I pointed out that if she hit the max by September and maxed out the extortion for social security at roughly the same time, the final paychecks of the year would go up to pay for Christmas. Now I didn’t really “approve” of the hyper-materialistic Christmases, but my approval was not very important here, and getting her to hit the maximum in her 401(k) as early as allowed was as much of a win as I could hope for.

    • The Mad Fientist
      February 17, 2014 at 9:16 am

      Advising your significant other on finances could be a messy/dangerous business (hopefully that isn’t the reason she’s now your former girlfriend) but it’s good to hear you secured at least one big win for her!

  25. Lars
    February 16, 2014 at 12:14 am

    First I should that I enjoy reading your website and all your pod casts. Thanks for putting these together.

    To make a long story short, I’ve been at my company for 8 years and I’m debating about leaving it in May due to some stock vesting. I’m in a position that I can probably take the rest of the year off and my wife is making a good salary at her current job (and she really likes her job). I’m kicking around the idea about maxing out my 401k between now and May. I have a bonus coming in March, which may make it easy to get there.

    I’m just wondering if any readers have done this before and then left. My only concern is landing a job in Sept/Oct with a match and I’ll miss out on that. Is it possible to do after-tax contributions to a 401k (in this case) & still get a match, since I already hit the max contribution limit by the IRS? If not, perhaps it will make it easier to wait till Jan to find replacement job. Any experience here? Thanks!

    • Lars
      February 16, 2014 at 12:15 am

      “First I should say” – can’t believe I made a typo in my first comment. Wish blogs had an edit comment feature ugh! Thanks again for putting together a great website!

      • The Mad Fientist
        February 17, 2014 at 10:59 am

        Yeah, I’m sorry you can’t make edits. There are plugins that provide comment-editing functionality but I haven’t installed one because I don’t want to slow my site down (sometimes plugins cause performance issues).

        If you ever want to edit a comment in the future, just shoot me an email and I’ll make an update behind the scenes.

    • The Mad Fientist
      February 17, 2014 at 10:53 am

      My pleasure, Lars! Glad you’ve been enjoying the site.

      If I were you, I’d probably front-load the 401(k) but I would leave a bit of padding in order to take advantage of some employer match, if available, in October, November, and December.

      Whatever you decided to do, I wouldn’t try to exceed the 401(k) limits or put off finding another job just to maximize your 401(k) contributions and employer match. A full paycheck is much more valuable than a x% employer 401(k) match!

  26. Will Murphey
    February 19, 2014 at 1:45 am

    Slightly different strategy;

    Retired at 37 (family if 4)

    Wished I had not fully maxed out my 401K during our working years. I should have grabbed my company match and moved on. Saved those dollars in an equity account and purchased a few rental properties. I now am stuck with a 72(t) or taking the 10% penalty to access my funds.

    • The Mad Fientist
      February 19, 2014 at 12:54 pm

      Will, you should look into the Roth IRA conversion ladder strategy because it is much better than 72(t) and will allow you to access your retirement account money without being penalized. Check out these two articles for more information:

      Retire Even Earlier
      Early Retirement Withdrawal Strategies and Roth Conversion Ladders

      • Will Murphey
        February 19, 2014 at 1:23 pm

        Thanks for the info! This will allow for a little bit of cash to trickle out slowly. Any amount helps.

        • The Mad Fientist
          February 19, 2014 at 3:40 pm

          Actually, you could take as much out as you want with this method. The conversion is taxed as normal income so the more you convert, the more you’d have to pay in taxes but you could potentially convert the entire balance in one year and then withdraw the converted amount from your Roth IRA, penalty free, five years later.

          I plan to stretch out my conversions over my entire early retirement though so that I pay as little tax as possible.

  27. mistersquirrel
    February 20, 2014 at 3:55 pm

    employer matched contributions, share incentives, and share saves should be a total no-brainer. where I worked before, there was an option to buy shares (at a small discount) every month – but they key was that it was out of pre-tax income therefore at the time it was a 40% discount on the shares. totally free money!

    to my shame, I actually didn’t do this for the first 3 years I worked there because I stupidly thought I’d prefer the “cash in my pocket”. doh! so I missed out on free money, a “pay yourself first” savings, and I spent all the cash anyway.

    older and wiser now – if there’s free money going grab it!

    • The Mad Fientist
      February 21, 2014 at 8:14 pm

      I’m sure we all have similar stories from our youth. That’s why I’m so jealous of the college-age readers out there. Hopefully they read this stuff and avoid most of the mistakes we made.

  28. MoneyAhoy
    February 26, 2014 at 4:21 pm

    Very interesting concept! The idea had never occurred to me to try something like this, but it makes perfect sense!

    • Lifehacker
      February 28, 2014 at 12:06 am

      So my question is, if I run my own business (C-corp), what kind of retirement account makes the most sense given that I can control all the variables?

      Funding a Roth IRA is a no-brainer. As is an HSA (and I get the sense that there’s a way to avoid FICA taxes with that, correct?). The question is where to go from there… SEP, Individual 401k?

      The problem is I pay myself a fairly modest wage so I loathe essentially taxing myself an extra 15% in order to put more money in. Thoughts?

      • The Mad Fientist
        February 28, 2014 at 10:30 pm

        I’ve actually been doing some research about this sort of stuff but I’m still far from an expert on the subject.

        Owning a corporation allows for a lot of tax trickery, so you have a great opportunity to lower your taxes, but sadly I don’t know enough to help you (yet).

        A book called Lower Your Taxes Big Time talks a lot about using corporate entities to reduce your personal income taxes so you may want to check that out.

        • Lifehacker
          March 1, 2014 at 2:20 am

          Agreed. My father is a Corporate Tax attorney, so I’ve been fortunate in that way. I’ve been employing a similar strategy for many years. Very appropriate for many people — LOTS of benefits.

          If you come across any blogs that deal with self-employed approaches to 401k’s I’d appreciate knowing. I just started learning about Roth 401k’s – which seem particularly appealing. I’m thinking about tying a 401k with my C-corp. But this area (401ks/SEP/SIMPLE) is pretty new to me.

    • The Mad Fientist
      February 28, 2014 at 10:10 am

      Thanks a lot. Glad you enjoyed the post!

  29. Jon
    March 3, 2014 at 9:22 am

    Great article and plan, Mad FI!
    I too fall victim to true-up antics…but a positive unintended consequence of this move ( I load 50 % early & often ) is that I get “used to” living on @ half of my income until I hit the 17.5k limit. I try to keep it going for the remainder of the year…with a slip up here and there. :)

    • Lifehacker
      March 3, 2014 at 8:24 pm

      Jon, you’re living on 50% of income?

      • Jon
        March 3, 2014 at 8:33 pm


        I try my best live on half of my pay…doesn’t always happen but I want to become FI ASAP…

        • Lifehacker
          March 3, 2014 at 8:44 pm

          Amen to that. I try to do the same. Mind sharing any strategies you’ve found that helps? Love to pick the brains of other likeminded.

          • Jon
            March 3, 2014 at 9:30 pm


            The usual LBYM stuff…modest house, no fancy threads ( Target stuff really is as good or better than Polo et. al ). I also spend my paycheck as fast as it comes in…..on a mortgage payment ( or two ), throw any “extra” into my Vanguard account…pre-pay whatever I can. For me, I’ve noticed idle money is the devil’s currency. :)

    • The Mad Fientist
      March 3, 2014 at 8:27 pm

      Thanks, Jon! Getting used to living on less is definitely a good side effect of this strategy.

      • Lifehacker
        March 4, 2014 at 1:57 am

        Good line on the devil’s currency. :) Thanks for sharing.

  30. Rob
    March 3, 2014 at 4:43 pm

    Not sure if its ok to put links in comments. But BankRate had an article along these lines. Fund an IRA early to grow a bigger account.

    • The Mad Fientist
      March 3, 2014 at 8:38 pm

      Hey Rob, relevant links are always welcome.

      I liked the following paragraph in that article:

      “Assuming an 8 percent annual rate of return, a 25-year-old investor who contributes $5,500 a year to her IRA at the beginning of each year would have $113,985 more in earnings after 40 years than her peers who wait until the following spring to contribute.”

      Sounds good to me!

  31. John
    March 16, 2014 at 6:03 pm

    I might be doing something wrong here, so help me out. My employer matches up to 6% if you put 6% in, so with front loading I’d still need to maintain that somehow.

    If I contribute my entire paycheck ($5500 gross, monthly), this paycheck calculator (pretty accurate through work’s web site) says I’d still owe $581 in taxes. If I do that for Jan and Feb, I need to put $3500 in for March so I can put the $330 in April-December and still get the full match. March’s paycheck would have been $1230, but the taxes from Jan/Feb take it to $68, right? The other months I net $3629 with minimum match. Total 401k: $21,430. Total in my pocket: $32,729.

    If I DCA with an equal amount every month, I get the full employer match and the same total 401k: $21,430. However, I’m calculating my total net higher, at $34,236 (netting $2853/mo).

    Am I missing something with the taxes in the first scenario?

    • The Mad Fientist
      March 17, 2014 at 8:49 am

      Hi John, if you contribute your entire paycheck to your 401(k), the only taxes you should have to pay during those months would be FICA taxes at 7.65%. That would mean you would only have to pay $420.75 for the first two months.

      It looks like the calculated taxes are a bit off for the other months as well because you should pay the same amount in taxes whether you front-load or not.

  32. CD
    April 12, 2014 at 10:47 am

    Well, I have a real knack for buying high. It’s seriously annoying me. I decided to stop dollar cost averaging a large chunk of money because I was sick of it sitting in cash, and I dumped it all in on what I know see was the second highest price of the year. (Not the most recent April surge but back in Feb). I also invest once a month from my paycheck and I swear it’s always investing on a day right before a decent drop. I am not trying to time the market but clearly I have terrible luck with timing. I’m probably the only person showing negative return right now (in my taxable account) after all the gains from 2013. Do you have any words of encouragement for me so I can stop feeling like such a moron? I know the overall trend is up and I have no intention of pulling money out any time soon, but still. Moron.

    • The Mad Fientist
      April 14, 2014 at 8:56 pm

      Hey CD, you’re not a moron (you’re a Mad Fientist reader, after all :) ). If anyone could actually time the market they would be wealthy beyond belief so that fact that you can’t shouldn’t be a cause for concern. Market timing is a loser’s game so putting your money to work immediately is a better strategy over the long run, even if you feel like you’ve taken a beating in the short term.

      Check out my tax-loss harvesting article to see how you could potentially make some lemonade from you lemons.

  33. Even Steven
    May 20, 2014 at 12:44 pm

    I was reading Gunieau Pig#2 and had to back track my way through apparently I skimmed it like an 8th grade required reading assignment.

    My thoughts on front loading are while I agree that if you have 120K sitting there don’t dollar cost avg the money over the year, I think that’s entirely fair although I’d prob be scared to put 120K in and rather split it up into 2 investments of 60k for cash safety and the possibility that the one time I invest the market tanks like the great depression.

    My other thought is most people can’t contribute such a large amount at the beginning of the year, myself included. If I were making 48K/4k month to keep it simple, that means I would be able to contribute 75% of this or 3K month in investments(correct me if i’m wrong please) with 1K left to be taxed, which is quite a small amount considering that taxes and insurance and travel have not been taken out and of course your HSA.

    Am I totally missing something on my numbers or is this really hard to do?

    • The Mad Fientist
      May 20, 2014 at 5:50 pm

      There is no set amount that you need to contribute so just contribute what you are able to. If contributing $3k on a $4k/month salary doesn’t leave you with enough money to live on, only contribute $2k or something per month instead. The Guinea Pig numbers are tailored for the GP’s income and spending levels so you’d want to adjust things for other scenarios. This article is not about how much you should contribute but what type of account it makes sense to invest in first.

  34. Maverick
    May 20, 2014 at 3:45 pm

    My employer’s 401K only allows contributions up to a maximum of 25% before tax. :(

    • The Mad Fientist
      May 20, 2014 at 5:51 pm

      Bummer. You can still do it but it will just take you a bit longer, I guess.

  35. Shashi
    May 27, 2014 at 5:47 pm

    Thanks to you, my wife and I have started maximizing and front-loading our 401k. As you suggested, everyone should check their company policy on employee match. In our case, we need to make a minimum contribution of 6% every month to get the max. company match.

    Thanks a ton!

    • The Mad Fientist
      May 28, 2014 at 8:50 am

      My pleasure, Shashi!

  36. George
    September 1, 2014 at 1:22 am

    This is an amazing idea. Tax gain and tax loss harvesting were good, but 401K contribution is something that I already do, so this is something that I can do immediately.

    Thank you for the great idea.

    • The Mad Fientist
      September 4, 2014 at 4:03 pm

      Glad you enjoyed the article, George!

  37. Dee
    October 16, 2014 at 4:30 pm

    I am sure my situation is not unique, it is just unique to me. My company still has a pension plan, so automagically, every month, 6.9% of my gross monthly salary is sucked up. They contribute 8%, but I don’t see that until I am vested. There is also provisions for 401K and 457(b), with no match. I currently contribute 1% to the 401K and 1% to the 457(b) (A Roth). Your idea of front-loading is intriguing and something I may experiment with come January. Thanks for a great blog!

    • The Mad Fientist
      October 22, 2014 at 4:46 pm

      Thanks for the comment, Dee! Let me know what you end up deciding to do in January.

      • Dee
        October 22, 2014 at 10:45 pm

        Thanks MadFI. I understand I can stash 17.5K in the base 401K and an additional 17.5 in the Roth 457. I am almost at the point with my after-tax savings I could probably do one, or the other: live off the savings for the first 4 months and then modify so I gain the income from my salary. Still running the numbers.

        I know you are a fan of tax-advantaged accounts; I am as well. However, looking at the “fees” associated with “managing” my 401K (Great Western), they look rather high, even though my investment choices are passive (mostly Vanguard Institutionals). Again, still running the numbers.

        Any suggestions?


        • The Mad Fientist
          October 28, 2014 at 5:37 am

          Hi Dee,

          It’s a shame you have high fees but I’d still say the tax-advantaged accounts are likely worth contributing to (see this post for reasons why). Just make sure you rollover those accounts to a cheaper IRA (at Vanguard, for example) when you leave that job so you aren’t paying high fees unnecessarily.

  38. Daniel
    November 9, 2014 at 10:49 am

    Very timely for me to run across this blog. I just recently upped my 401k contribution percentage to 50% because I have a hoard of cash in my checking account and it makes sense to “convert” that into a tax-deferred account, by drawing a smaller paycheck.

    With this change I had been contemplating keeping my contribution at 50% next year or even bumping it to the 75% max my employer allows.

    Also took away from the comments how fortunate I am. My employer makes a fixed contribution of 3% of my salary, regardless of what I do. They also match my contributions 100% up to 6%.

    • The Mad Fientist
      November 15, 2014 at 6:26 am

      I just set my 403(b) contribution percentage to 98% for next year because I’m sitting on too much cash right now so I’m happy to contribute the max for the first part of the year.

      I’m also lucky in that my company makes a fixed contribution every month, no matter what I’m doing. Makes things much easier!

  39. Enrique
    November 12, 2014 at 11:34 am

    I have a question about the postponing taxes part of the article. It says: “You’ll end up paying the same in taxes by the end of the year but the money you save on taxes early in the year can be invested in your portfolio and can grow for you rather than for the government.” Does this mean that at the end of the year i will end up paying the same amount of taxes as if I didn’t front load? I thought that if i put more of my paycheck towards a 401k there will be less money left to tax from, and then later when im done front loading, i will have more money per paycheck and therefore get taxed more, but at the end of the year i would still be saving in taxes from the beginning months that i didn’t pay as much taxes, right? Thanks!


    • Daniel
      November 12, 2014 at 1:36 pm

      I think the assumption being made in the post is that the person will make the same total amount of contributions to their 401K whether they front-load or not. For instance if they planned to max out their 401K, they can only put in $17,500 no matter the timing of the contributions. If they put $1,458.33 in each month or $2,916.67 for 6 months the end result would be a $17,500 contribution to their 401K and the same tax savings.

    • The Mad Fientist
      November 15, 2014 at 6:48 am

      Hi Enrique, Daniel’s exactly right (thanks for chiming in, Daniel!)

  40. Richard
    February 12, 2015 at 11:30 pm

    This is awesome. I don’t know why this never occurred to me before!!

    One thing I don’t think I’ve seen anyone comment on is bonuses, which could potentially affect the numbers. (It would be a similar ‘issue’ of getting a raise, but potentially on a larger scale).

    I typically get a bonus in the summer, and my 401k withholding percentage is also applied to that, as well as my employer match. If I’m not careful to leave enough room, a large enough bonus could easily make me run out of contribution room before the end of the year!

    ….time to go make a spreadsheet… I can frontload as much as possible!


    • The Mad Fientist
      April 10, 2015 at 10:06 am

      Hi Richard, definitely leave room to account for things like that because it’d be awful to miss out on free employer money!

      Good luck with the spreadsheet and have fun front-loading :)

  41. Martin
    April 9, 2015 at 3:20 pm


    Do you have any numbers/simulations that might quantify the expected gain from front loading? (Assuming employer match is not an issue.)

    • Martin
      April 9, 2015 at 4:30 pm

      Nevermind on the request for data. I realize that it really is the same lump sum vs. DCA argument that has been previously settled.

      Personally, since I would likely have to stop my taxable contributions, it is a moot point. I am striving for optimal investment of my cash, so would not have the “extra” cash to tide me over until my paychecks rebounded. If I did have extra, well, that money should have been invested and not just sitting around.

      Thanks for the great site.

      • The Mad Fientist
        April 10, 2015 at 10:13 am

        Hi Martin, yeah it’s very similar to lump sum vs. DCA.

        Glad you’re enjoying the site!

  42. Mr. Enchumbao
    July 7, 2015 at 1:25 pm

    Awesome article, I’m linking it on our next post. My wife and I started front-loading this year. It’s a funny feeling when you see a little paycheck hit your bank account but we’re doing just fine. We just tap into our reserve every now and then to fill the gap by month’s end. We also have income from a rental property which helps ease the blow.

  43. brent
    July 31, 2015 at 12:07 pm

    Great article and ideas. Thank you.

    One thing though … you never actually define Front Loading. You may say it at the end, but it just assumes you know what it means. I was expecting something like … “Front loading is the act of maximizing your 401k/retirement accounts at the beginning of the year (Jan/Feb) in order to maximize gains early and throughout the year.” Or something like that. Newbies might want that.

    Thanks !

  44. June
    September 23, 2015 at 11:20 am

    I know this thread hasn’t been active in a while, but for those of you who have contributed 100% or 98% of your paycheck, that doesn’t leave enough to cover even FICA. Do they take out FICA prior to calculating the percentage contribution?

    • CT
      September 23, 2015 at 4:23 pm

      June – Most places would have a max percentage that you can contribute so there is money left over for taxes, dues, medical, etc. They don’t take out FICA prior to calculating your deferred compensation. If your paycheck was $1000 gross and you were contributing 70% – they would take out $700 for deferred comp and the remaining $300 is where FICA (6.2% of $1000), federal/state (% of $300), medical, dues, etc. That would be why you wouldn’t be able to contribute 100% of pay.

      • June
        September 23, 2015 at 4:45 pm

        That is my concern. I can contribute to up to 95% of my pay to a 403b. So it never occurred to me that they wouldn’t take FICA out first since 5% clearly doesn’t cover FICA. Some people here say they contribute 98% or 100% – that’s got to be after other deductions I would assume.

        • CT
          September 24, 2015 at 1:16 am

          Yes, I am not sure how that can be. At my work I can do 70%. Originally they said you could put a higher percentage in but realized that there wasn’t enough for other deductions and lowered to 70%. It really is or s/b common sense. I know for a final paycheck they would let me do 85%. My deferred comp is based on my gross pay. I guess it is possible that other employers calculate it differently. You also have to contribute 1.45% off the top to medicare. You may also have to contribute to a state disability fund. Just depends on where you live. If you happen to be in a union you would have to contribute dues. There are other possibilities too for off the top deductions. You would only have to pay federal/state on the remainder after deferred comp. Probably 70 to maybe 80% would be the max based on gross. Most people cannot afford this so it usually isn’t a problem.

  45. Russell
    July 8, 2016 at 6:32 pm

    I am going to try this as well but at different periods in the year. But I disagree, you can ‘time’ markets. Retail folks just really have no clue what drives prices in the market, it’s sad.

  46. chris
    August 31, 2016 at 12:18 pm

    Any recommendations for how to put away a 6 month cash reserve for early stages of FI (still working). Would i just do a money market/savings account with bank of america or is there a better option?

  47. Eric
    August 31, 2016 at 1:56 pm

    I personally use an Amex Personal Savings account, but I’ve heard that Ally has good (relative term here) rates too.

  48. Joel
    September 8, 2016 at 5:56 pm

    One benefit of frontloading 401(k) contributions that I haven’t seen mentioned here (though I admit I haven’t read every comment) is that if your employer offers the option of converting your 401(k) to a Roth 401(k) like mine does, I believe you could contribute all the money pre-tax to a 401(k) and then convert it immediately after that to a Roth 401(k) to avoid taxes on earnings in the 401(k) account. If you spread out the contributions over the year and then rollover at the end of the year, you’re much more likely to incur taxes from the conversion due to appreciation of the 401(k) assets. Or am I missing something?

  49. Bryan
    September 12, 2016 at 3:33 pm

    This is a great article.

    Could you explain how/if 401(k) contributions and IRA contributions overlap? For example, lets say I earn $5,500/mo and am front loading both my 401(k) and IRA. I put 90% toward my 401(k) each month early in the year for front-loading purposes, living off of my emergency fund. I also wait until I have $5,500 of earned income (at the end of January) to fully contribute to my IRA, just to avoid having to take it back out if I lose my job and don’t work for the rest of the year.

    On January 31st, I have earned $5,500, contributed $4,950 to my 401(k), and also contributed $5,500 to my IRA. If I am fired February 1st, and don’t work for the rest of the year, how does the IRS view that overlap in contributions? Does the 100% of my income that I put to an IRA overlap with my 401(k) contribution, and will I have to pay a penalty?

    Does that make sense? Am I missing something?

    Thank you again fro your blog, and for your time!

    • Nina
      January 4, 2018 at 1:34 pm

      I’m interested in your response to this. Thanks for your incredible blog. I learn so much here!

      • Greg
        January 10, 2018 at 9:13 pm

        Also interested…

  50. Single Guy
    July 2, 2017 at 2:16 pm

    I’ve been doing this since 2007 and I think it’s really helped to boost my returns.

    I read about doing this in 2006 and it sure helped 2009 to today. (First 2 years not so much but I stuck with it)

  51. nicole
    December 29, 2017 at 3:37 pm

    what do you think about doing this in a bull market like now? I’m thinking of doing it for my 401k and has accounts starting jan 2018.

  52. Mr. Frugal Pharmacist
    February 22, 2018 at 10:20 pm

    This is my first year doing this. Just got two more paychecks to go, and I will have contributed the full $18,500 maximum to my 403b by March! My wife and closest friend at first thought I was crazy for doing this, but now the wife is on-board after I explained the benefits and my friend said he just might try it next year. It feels awesome!

    Admittedly, there’s a lot of things I do that people call me crazy for (like biking most days of winter even in low temperatures) but hey, I just tell myself that they’re crazy for NOT doing it. Ha.

  53. Katherine
    April 13, 2018 at 9:28 am

    I just came across this article, and while I am very intrigued by this idea, I wonder what cash flow everybody is using to live off of while devoting entire paychecks to retirement savings. My net worth is a little over $30k, so it’s not as though I don’t have anything saved, but I’ve recently gone the “emergency funds are a huge opportunity cost” route with my money, so I only have about 1-2 months of living expenses in cash at any one time.

    • Mr. Frugal Pharmacist
      July 4, 2018 at 7:09 pm

      In my case, I don’t own a home yet, but I’m planning to buy one within the next year or two, so I’ve been saving chunks of my paychecks into an online savings account so that I’ll have enough for a 20% down payment. I used a little bit of those funds during the first two and a half months of this year to cover a portion of my living expenses. The rest of my living expenses were covered by the remaining 30% or so of my paycheck that was left over after front-loading (at my job, the max I can contribute to my retirement account per paycheck is 70% of it).

      In the future, once I own a home, I’ll have to provide an update on how I cash flow the first few months of front-loading but yeah.

  54. Marko
    August 1, 2018 at 12:22 am

    Hi, I LOVED your article! It’s an idea that I haven’t heard of until now, so today I immediately ran to my HR department to see if it’s possible. We still don’t have a policy in place, but will create it as soon as the director returns from vacation :)

    My salary is currently not that high that I can max out my 403b and IRA and contribute to a Vanguard index fund and still have enough to survive. So, considering that 403b and IRA are generally meant to be used after 59.5 and I am currently 37 and planning to retire way before 59.5 :) what do you think should be my strategy? Are the tax benefits of investing into 403b and IRA bigger than potential gains from investing that money into a Vanguard index fund? Should I max out 403b and IRA or just invest enough into 403b to get the employer match, and invest the rest into an index fund?

  55. Ross
    August 20, 2018 at 6:44 pm

    One other thing about the true-up: my company doesn’t offer a true-up for their match, but they do have an after-tax 401(k) option which they will match. So the solution is to max out the pre-tax 401(k), then contribute at least the max percentage in the after-tax 401(k), which does not have the $18,500 limit but instead only contributes toward the $55,000 total 401(k) limit. Then at the end of the year you can convert that to a Roth IRA using the Mega Backdoor Roth as described in your article on that topic. Ta-daa!

  56. JVJ
    November 3, 2018 at 1:30 pm

    So, my husband’s company have switched to only providing a match at the beginning of the following year, if you are a still a full-time employee at the end of the previous year. So, ONLY if he is still a full-time employee on Dec 31, 2018, will he then get the full match deposited in the first quarter of 2019. It’s total crap compared to how it used to be, which was a match deposited with each monthly paycheck. And his is 7% so it’s not chump change.

    But, with this change (there was no true up before so we never front loaded), I’m thinking that front-loading might be beneficial? Thoughts on this based on how his match works? I mean, he won’t get the match if he’s not working the last day of the year, regardless on how he contributes, so might as well do it all up front, right? Thanks.

  57. Allison
    August 30, 2019 at 2:08 pm

    I know this is an old post, but I’m wondering if someone who is a bit more seasoned at frontloading could give me some advice for handling things next year.

    My current company has a 6% match and will pay out the match no matter when you put the money in as long as you hit the 6%. They true up at the start of the next year. So frontloading doesn’t lose me that money. It doesn’t matter whether I’m still a current employee (have it in writing from HR).

    I’m actively trying to look for a new job for a variety of reasons, so I’m hoping that I won’t be here through all of the next year, so frontloading for the 6% makes perfect sense. My question is whether it’s worth skipping all other investing (IRA, general investing, college fund, etc) for the first few months of the year to frontload until I hit the IRS max.

    Just to give general numbers, if I frontloaded everything I possibly could (70% of salary), I could hit the 6% match in three paychecks. That would be a stretch for me to cover living expenses, but might be doable by tapping cash reserves. If I slowed down then to just reapportion my non-401k living expenses, it would be approximately the next 6 paychecks until I maxed out my 401k. So, in short, maxing out my 401k in 9 paychecks, or roughly mid-April. Then I would take the money that wasn’t being saved in 401k to handle IRA and other savings goals I would want to hit. (That’ll end up being a bit shorter because we get our bonuses in March.)

    Alternatively, I just lower the rate after hitting the 6% to max out before the end of the year and call it a day.

    I see the benefits of frontloading the full amount of the 401k as:
    1. If I leave the company, I’ve maxed out the 401k as soon as I can and ensured I got the match.
    2. The possibility of being able to “double dip” into another 401k if I leave for a new job.

    The negatives are:
    1. The other, non 401k assets are part of diversification, so I’m sort of reducing my diversification for a few months.
    2. While I’m not overly worried about cash reserves, this plan would reduce my liquidity for probably about 9 months. If I got laid off, etc., that could hurt.

    Is there anything else I should consider?


    • David
      May 23, 2020 at 3:03 pm

      My understanding is that you won’t be able to “double dip” into the tax-advantaged portion of the 401(k). In other words, your annual maximum pre-tax contributions are across all 401(k) accounts for the year. If you switch employers during the year, you should notify your next employer how much you already contributed pre-tax so you don’t contribute more than the annual limit.

  58. David
    January 10, 2022 at 8:06 pm

    After I read jlcollinsnh’s article, “Stocks — Part XVIII: Investing in a raging bull”, I also had the idea of front-loading my 401k. Unfortunately I didn’t see this post first, and I had a real “oh crap!” moment when, after I reached the annual contribution max in the third month, my company’s match stopped when my contributions did!

    Luckily, my company did have a “true-up” which gave me the rest of the match, but it took a few months into the next year for it to be deposited. Not to mention it was a pain to describe my front-loading strategy to the HR rep – they didn’t seem to know the concept of “true-ups” off hand. Same was true of my wife’s company when I called to ask the same thing (it took a few escalations to get someone on the phone who knew the answer).

    So, all in all, the benefit of front-loading was offset for me due to
    1 – the delay in the company matching true-up (counteracting on the goal of front-loading)
    2 – the headache of verifying my and my wife’s company had matching true-up
    3 – remembering to manually update contribution percentage

    That being said, now that I know my company does true-up and knowing that they will automatically stop my contributions beyond the annual limit, I might just hike up my contribution percent to the max and forget about it!

  59. GlockLT4
    August 18, 2022 at 2:41 pm

    Well, I picked a bad year to start frontloading my entire 401k contribution (with 100% match). Oh well! I agree that mathematically it’s a wise decision in the long run and will keep doing it for my remaining few years working.

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