True-up contributions

A true up contribution, generally speaking, is an employer reconciling employer matches on contributions to account for things such as front loading contributions, changes in compensation, etc. For instance, if you have a match of 4% of salary on 5% contributions, but you only make 5% contributions for the first 6 months due to front loading, you would ultimately only receive half of your match since the last half of the year won’t have 5% contributions per pay period. If a company has a true-up policy, they may add the missing employer contributions in the subsequent year when they reconcile the books. This generally happens in the first quarter of the next fiscal year. However, true-ups are largely seen as risky because they are dependent on the company honoring the match in retrospect.

While true ups may be stated by benefits to be likely, it's something to consider when potentially looking to front-load contributions. The benefit of the growth in the tax-advantaged account may also be offset by the fact that the employer match will likely be reconciled in the first quarter of the following year.