The Bigger Paycheck
MONEY MEETS TAX · EPISODE 28
Irvine · October 2026
Money & Tax in this episode
An unexpectedly larger paycheck · Reaching the 401(k) limit early · Employer match and contribution timing
Evan looked at his paystub twice.
Then once more.
Daisy was on the floor with Jiwoo, trying to keep a wooden ring out of her mouth and a book in her hands at the same time.
“What?” she asked.
Evan was still looking at the screen.
“My paycheck is higher.”
Daisy looked up.
“That usually sounds like good news.”
“It is good news. I think.”
“You don’t sound convinced.”
Evan turned the laptop toward her.
“The net pay is up.”
Daisy leaned closer.
“By how much?”
Evan told her.
She raised her eyebrows.
“That’s not nothing.”
“No.”
“That’s groceries, diapers, and half a stroller-related emergency.”
“That is a very specific budgeting category.”
“It’s a very real one.”
Evan looked back at the paystub.
“For a second I thought payroll made a mistake.”
“Did they?”
“I don’t think so.”
He clicked into the deductions.
The 401(k) contribution line was gone.
Not reduced.
Gone.
“I think I maxed out my 401(k).”
Daisy paused.
“So they stopped taking it out?”
“Looks like it.”
“And now the money is staying in your paycheck.”
“Yeah.”
She nodded.
“That makes sense.”
“I just wasn’t expecting it today.”
Jiwoo slapped the book shut with both hands, pleased with herself.
Daisy took it back.
“Isn’t there an annual limit?”
“Twenty-four thousand five hundred this year.”
Evan clicked into the year-to-date contributions.
The total was $24,500.
There it was.
He had increased his contribution percentage earlier in the year. It was easier to set it once and stop thinking about it.
At the time, that had felt efficient.
Now he had reached the limit with several paychecks still left in the year.
Daisy stood up with Jiwoo on her hip.
“Is that a problem?”
“Not necessarily.”
“What are you checking?”
“The employer match.”
She shifted Jiwoo to her other side.
“Would that stop too?”
“Maybe. That’s what I need to figure out.”
Daisy came over to look at the screen.
Evan opened the benefits website.
“Some plans calculate the match with each paycheck. So if you stop contributing early, you might miss some of the matching contributions later in the year.”
“Even though you contributed the maximum?”
“Right.”
“That seems worth checking.”
“Definitely.”
He opened the plan summary.
Daisy watched him scroll.
“What would prevent that?”
“A year-end true-up. Some plans make an additional matching contribution based on the whole year.”
“And ours?”
“I’m looking.”
Jiwoo reached for the laptop.
Evan moved it just beyond her fingers.
“She seems interested.”
“She wants to know if we’re leaving money on the table.”
“Good question.”
Daisy smiled and carried Jiwoo toward the kitchen.
Evan kept reading.
The plan summary explained the matching formula.
But the more he read, the less certain he was about how the match worked when employee contributions stopped before December.
He opened another page.
Then another.
Daisy returned with Jiwoo in her high chair.
“Find it?”
“Not clearly.”
“Can you ask Benefits?”
“Yeah. I’ll send them a question.”
“Good.”
He opened an email and started typing.
Daisy put a spoon on Jiwoo’s tray.
“So what would you do differently next year?”
“Probably spread the contributions across the year.”
“Instead of reaching the limit in October?”
“Something like that.”
“Would your paycheck be smaller the whole year?”
“Compared with these last few paychecks, yes.”
She nodded.
“I think I’d rather have it predictable.”
Evan looked at her.
“Even if the total is the same?”
“Especially if the total is the same.”
She wiped Jiwoo’s hands.
“We have enough things that change from month to month.”
Evan knew what she meant.
Daisy’s design work had become more regular, but not every project produced income on the same schedule.
There were client visits, sample orders, invoices waiting to be paid.
The Anaheim house had its own expenses.
And Jiwoo had become very good at needing things neither of them remembered buying the last time.
Their household did not have a shortage of moving parts.
At least the paychecks could be predictable.
Evan looked at the larger net pay again.
“It was nice seeing the number, though.”
“I know.”
“Almost felt like a raise.”
Daisy laughed.
“Then I’m glad you enjoyed it.”
She sat down beside him.
“Does this also change the tax withholding?”
“A little. These were pre-tax contributions.”
“So more of your pay is taxable now?”
“Generally, yes.”
“But you still take home more because the contribution stopped.”
“Exactly.”
Daisy looked at the numbers for a moment.
“Okay. That makes more sense.”
Evan closed the paystub.
“Not quite as much extra money as it looked like at first.”
“Still more in the checking account.”
“True.”
She glanced toward the refrigerator.
“I was looking at our spending for next month earlier.”
“Anything unusual?”
“Nothing dramatic.”
“That’s good.”
“Except I think we should leave some room for the things we haven’t remembered yet.”
Evan smiled.
“That’s a budgeting category now?”
“With Jiwoo? Absolutely.”
He opened their household budget.
The larger paycheck had already arrived.
They didn’t need to make a decision about every extra dollar that afternoon.
Evan left the current month’s numbers alone.
Then he went back to the email.
Does the plan provide a year-end true-up if an employee reaches the annual 401(k) contribution limit before the final payroll?
He read it once.
Then sent it.
Daisy glanced at the screen.
“So that’s one thing checked.”
“One thing asked.”
“Close enough for today.”
Jiwoo dropped her spoon.
Daisy looked down at it.
Evan got up and picked it off the floor.
“Next year I should probably calculate the contribution percentage before January.”
“That would be useful.”
He opened his calendar.
January was only a couple of months away.
He added a reminder.
Review 401(k) contributions before first payroll.
Then he invited Daisy.
Her phone lit up on the counter.
She looked at it.
“A meeting?”
“Five minutes.”
“About retirement?”
“About payroll.”
Daisy accepted the invitation.
“Five minutes, then.”
Evan looked at Jiwoo, who had already dropped her spoon again.
“Assuming we’re available.”
Daisy handed him the spoon.
“That part I wouldn’t count on.”
The Tax Behind the Story
For 2026, the regular employee elective deferral limit for a 401(k) is $24,500. This limit generally applies to an individual’s combined employee deferrals across applicable plans, while employer matching contributions are subject to separate contribution rules. Once an employee reaches the applicable limit, further elective deferrals generally stop, which can result in a higher take-home paycheck.
The tax effect depends on the type of contribution. Traditional pre-tax 401(k) deferrals generally reduce current federal taxable wages, but they do not reduce wages subject to Social Security and Medicare taxes. Roth 401(k) contributions are treated differently because they do not reduce current federal taxable wages.
Employer matching is another consideration. Some plans calculate matching contributions based on each payroll period, while others provide an annual true-up. Reaching the employee contribution limit early can affect the total employer match depending on the plan’s provisions. The important question is not just how much an employee contributes, but how those contributions are spread throughout the year.
Want the tax rules behind the story?
Maxing Out Your 401(k) Early: Paychecks, Taxes, and Employer Match
Reaching the annual 401(k) contribution limit before year-end may increase take-home pay, but it can also affect employer matching contributions. This guide explains the employee contribution limit, pre-tax versus Roth contributions, payroll withholding, per-paycheck matching, and year-end true-up provisions.