Personal Finance

Don’t Leave Free Money on the Table: Year-End Employer Matching and Other Missed Opportunities

Rich Duprey

Published: December 27, 2024 4:16 pm

With the end of the year upon us, now is a good time to assess your financial and retirement planning to make sure you are maximizing your opportunities, especially the benefits provided by your employer. 

These perks are essentially additional compensation and neglecting them is just like leaving free money on the table. In particular, you should closely examine benefits such as retirement account matching, flexible spending accounts (FSAs), health savings accounts (HSAs), and other benefits that reset or expire annually.

Below we’ll take a look at each of these areas to ensure you are leveraging the benefits your employer offers.

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• We may complain about the grind of the 9-to-5, but most employers offer their workers valuable benefits that everyone should be taking full advantage of.
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Employer Matching Contributions

If your employer offers to match your contributions to your 401(k) program or similar retirement account, but only up to a certain percentage of your salary, you are essentially turning down a bonus if you don’t contribute enough to get the full match.

According to Greg Stein, director of financial technology at Financial Engines, “The 401(k) match is one of the best deals going for employees, providing an immediate guaranteed return per dollar invested.”  A dollar-for-dollar match, for example, is a 100% return on your investment. Here’s how you can ensure you’re capturing every dollar of that match.

First, review your current contributions. Make sure you know what percentage of your salary you’re contributing. If your employer matches up to 5% or 6% of your salary, have your contributions at least meet this to get the full match. Adjustments can be made so you’re not playing year-end catchup next year.

Next, consider the deadline. Many companies set a cutoff date for changes that can affect your year-end match, often in late November or early December. Make these adjustments before the deadline to ensure your contributions for the entire year are matched.

Flexible Spending and Health Savings Accounts

FSAs and HSAs allow you to set aside pre-tax dollars for medical expenses, significantly reducing your taxable income. However, unlike retirement accounts, FSA funds typically don’t roll over year-to-year, though some plans do have a grace period. Insurer MetLife (NYSE:MET) warns on its website that FSAs have a “use-it-or-lose-it” provision so that if you don’t spend all the money, you forfeit it, usually to the employer.

To use your FSA effectively, add up your medical expenses for the year. If there are funds left over, consider scheduling necessary medical procedures, buy eligible items, or save receipts for upcoming expenses. For HSAs, remember, while there is no similar use-by date, contributing the maximum amount before year-end also provides tax benefits for the current year. The maximum contribution in 2024 is $4,150 and will rise to $4,300 next year.

HSAs have the added benefit of being triple tax-advantaged: the contributions are made pre-tax, the earnings grow tax-free, and withdrawals for eligible medical expenses are also tax-free.

Other Employer Benefits

Consider tapping into other employer-provided benefits like wellness programs, educational assistance, or unused vacation days that might convert to cash or be lost. Each of these benefits has its own set of rules and deadlines. For instance, if your company allows for the conversion of unused vacation days, ensure you understand when you need to make this request.

Paul Seegert, managing partner at PCS Advisers in Chico, Calif., told CNBC, “There couldn’t be a better time to learn about what you already have available and not go spend money on these things.”

Key takeaway

As we close out the year, remember your employer’s benefits are designed to enhance your financial well-being. By taking full advantage of them, you’re not just saving for the future or reducing current tax liabilities, you’re essentially earning more from your job. 

Three steps every employee must take include:

• Check your retirement contributions to secure the full employer match before the deadline.
• Reviewing and possibly adjusting your FSA or HSA contributions, ensuring you’re not leaving money unspent or untapped.
• Look into other benefits, like wellness reimbursements or educational benefits, and use them before they expire.

Mark your calendar for any deadlines associated with these benefits and don’t let another year pass without fully utilizing these golden opportunities.