A 401(k) true-up is a year-end catch-up deposit your employer makes so you receive the full annual matching contribution the plan formula promised, even if the timing of your paycheck deferrals caused the per-period match to stop early. It matters most if you front-load your contributions and hit the IRS elective deferral limit ($24,500 in 2026) before December, because once your deferrals stop, the per-paycheck match stops with them.1Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 A true-up provision fixes that gap. No true-up in the plan document, and the lost match is gone for good.
When the Lost-Match Problem Actually Hits You
Most employers calculate matching contributions paycheck by paycheck. The payroll system looks at what you deferred that period, applies the formula, and deposits the employer’s share. Contribute steadily all year at or above the matched percentage and the per-period math delivers the full match.
Two situations break that clean result.
The first is front-loading. If you push a large share of your salary into the plan early in the year and hit the $24,500 elective deferral ceiling in, say, October, your deferrals for November and December are zero. The payroll system has nothing to match against, so the employer contribution for those months is also zero, even though your annual deferrals would easily qualify you for the full match.
The second is the annual compensation cap under Internal Revenue Code Section 401(a)(17), which for 2026 limits the pay a plan can count to $360,000.2Internal Revenue Service. 2026 Amounts Relating to Retirement Plans and IRAs, as Adjusted3eCFR. 26 CFR 1.401(a)(17)-1 – Limitation on Annual Compensation If you earn more than that, per-paycheck matching stops once your year-to-date pay crosses the cap, even though the plan’s formula, applied on an annual basis, would still owe you a match on that $360,000 of eligible compensation.
In both cases, a true-up looks at the whole year after it closes and deposits whatever the formula owes you above what the per-paycheck runs already delivered.
How a True-Up Is Calculated
Once the plan year ends and compensation data is final, the math comes down to three numbers.
Maximum potential match. Apply the plan’s formula to your total eligible compensation for the year. If the plan matches 100% on the first 6% of pay and you earned $100,000, the ceiling is $6,000.
Actual match received. Add up every employer matching deposit that hit your account during the year through payroll.
The difference. Subtract the actual match from the maximum potential match. A positive number is your true-up. Zero or negative means the per-period matches already delivered everything the formula owed.
A Worked Example
Say you earn $100,000, the plan matches 100% on the first 6% of pay, and you’re paid monthly. You decide to contribute about $2,450 a month to reach the $24,500 deferral limit by October.4Internal Revenue Service. Retirement Topics – Contributions
- Maximum potential match: 6% of $100,000 = $6,000.
- Actual match received: For months one through ten, your deferral exceeds 6% of monthly pay, so the employer matches the full 6%, or $500 a month. Ten months at $500 is $5,000. In November and December your deferrals are zero, so the match is zero.
- True-up amount: $6,000 − $5,000 = $1,000.
Without the true-up, that $1,000 is lost employer money. The earlier you hit the deferral limit, the wider the gap grows.
How to Tell Whether Your Plan Has One
A true-up is not required by law. It’s an optional provision that must be written into the plan document, and if the language isn’t there, the employer generally has neither the obligation nor the authority to make the contribution.
Ask HR or the plan administrator for the Summary Plan Description. Look for language about “annual” or “year-end” reconciliation of the match, references to a “true-up,” or wording about the match being calculated on a plan-year basis. If the SPD describes matching strictly on a “payroll period” basis with no year-end language, the plan probably does not include one. When the document is unclear, ask directly.
One boundary worth flagging: safe harbor 401(k) plans. IRS guidance permits safe harbor matching contributions to be calculated on a payroll-period basis without a year-end true-up. If your plan is a safe harbor plan and doesn’t include a true-up, that can be a deliberate, compliant design choice rather than an oversight.
Catches That Can Reduce or Eliminate the True-Up
The Last-Day Rule
Many plans require you to be actively employed on the last day of the plan year to receive a true-up allocation. If you front-load your deferrals and then leave the company in September, you can forfeit the true-up entirely. Some plans carve out exceptions for retirement, death, or disability, but those are plan-specific, not legal defaults. If you’re considering a mid-year departure, this single provision can flip front-loading from smart to costly.
Vesting
True-up money is employer matching money and follows the same vesting schedule as your regular match.5Internal Revenue Service. 401(k) Plan Overview On a graded schedule, you own the true-up in the same percentages, on the same timeline, as any other match dollar. Your own deferrals stay fully vested at all times.
What Counts as Eligible Compensation
The true-up is only as generous as the plan’s definition of eligible compensation. Plans commonly exclude overtime, bonuses, commissions, severance, fringe benefits, expense reimbursements, and deferred compensation from the matching formula. If a bonus doesn’t count as eligible pay, it doesn’t lift the ceiling, and it won’t produce a bigger true-up. The adoption agreement spells out what’s in and what’s out.
Catch-Up Contributions
Workers 50 and older can defer beyond $24,500. For 2026, the standard catch-up is $8,000, and a higher $11,250 catch-up applies at ages 60 through 63 under a SECURE 2.0 change, bringing the possible totals to $32,500 and $35,750 respectively.1Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 Most plan documents do not match on catch-up contributions. The matching formula usually applies only to regular elective deferrals up to the plan’s specified percentage of pay, so catch-up dollars sit in a separate bucket that doesn’t generate additional match. Confirm the treatment in your Summary Plan Description before assuming catch-ups will grow your true-up.
When the True-Up Lands
Because the calculation depends on final compensation and deferral figures, the deposit arrives after the plan year closes. The deadline for depositing matching contributions, including true-ups, is generally the employer’s tax filing deadline, including extensions.6Internal Revenue Service. Issue Snapshot – Deductibility of Employer Contributions to a 401(k) Plan Made After the End of the Tax Year For a calendar-year corporate employer using the full extension, that can push the deposit as late as October 15 of the following year. Most employers deposit true-ups in the first quarter after year-end.
If Your Employer Owes a True-Up and Doesn’t Make It
When the plan document requires a true-up and the employer fails to deposit one, that’s a plan operational error. The IRS provides a correction framework, the Employee Plans Compliance Resolution System (EPCRS), with a Self-Correction Program for certain failures and a Voluntary Correction Program for more significant ones.7Internal Revenue Service. Voluntary Correction Program (VCP) – General Description
The standard fix is for the employer to deposit the missed contribution plus lost earnings covering the period from when the deposit should have been made through the date the corrective contribution actually posts. If you have reason to believe a true-up you were owed never showed up, compare your final pay stub and W-2 against the plan’s formula, then raise it with the plan administrator in writing.