I am being laid off at the end of the year, just found out. My 401K contributions are set up so that I hit the cap (or really close) by the end of the year.
Should I increase my 401K contributions now to try to hit the cap earlier/sooner? If I leave the company for a new company, there may be a waiting period for their 401K and I don't want to miss out on 2025 contributions. My company does a true up contribution.
On the other hand, should I throttle back on my 401K contributions now so that I can get more cash on hand to ride out break between jobs if it comes to that?
I am already looking for new roles but would also appreciate other peoples experience, advice, and opinions. My head is spinning a bit and want to make a logical decision.
Being laid off end of year; accelerate 401K to max out, or scale back for more cash on hand?
byu/SnowShoe86 inpersonalfinance
Posted by SnowShoe86
12 Comments
Do you have enough cash right now to get you through?
How hard will it be for you to get a new job? Have you already started applying?
I would only invest the minimum to get the max match (if they offer). Primary focus right now is securing employment and keeping funds as liquid as possible.
> should I throttle back on my 401K contributions now so that I can get more cash on hand to ride out break between jobs if it comes to that?
What kind of emergency fund do you have right now?
Any idea how long it might take you to find a new job?
Only if you have a job lined up otherwise keep the cash at hand until you know what you want to do with it. Worst case (which isn’t really a worst case I guess) if you find a new job quickly and didn’t max out 401k for the year you can still stick the money into an individual brokerage and pay a bit more on taxes for that money in the long haul but that’s probably safer then trying to pull out of 401k funds in an emergency if the alternative is true.
Of course if you have a very high cash savings and are confident in finding new employment quickly maybe that changes depending on your risk tolerance there
Why would you save for the future when your present is a total unknown? Fat lot of good the 401k will do if you’re starving
How old are you? How much do you have saved in an emergency fund?
Sorry to hear of the layoff. You don’t mention if there is an existing 3-6 month emergency fund. So, I’d throttle voluntary contributions to 401k all the way back and build cash for what may be a lapse between jobs. Of course there is unemployment and you may get a great replacement even before lay-off? Is there a severance benefit? Whatever is left over when you do have a new job can fund the emergency fund and the rest go to a self-directed Roth.
Sorry you’re going through this. I would scale back to match only, if I were in your shoes. Yeah you’ll miss out on a bit of contributions but it’s more important to be liquid right now.
Make sure you capture as much employer match as you can but otherwise scale back. If you find something fast you contribute to the new 401k or IRA.
You need 3 months of salary in savings to get by while you’re looking. Let that be the decider
The economy is a huge unknown with unreliable (corrupt) data and rapid spurious changes as well as the increase in price for household goods, thanks to tariffs and Baghdad Bob at the wheel.
You don’t have work lined up and you mentioned UI is a joke in your state. It’s time to trim your monthly spending *now* (not after you’re jobless) and boost your emergency fund. If you find new work before the end of the year, sure, shovel as much as you can into your 401k with your final paychecks.
Yes, it sucks to miss out on tax advantaged space. It sucks more to be unemployed in a bad job market and to run out of liquid savings. Maybe you find a job fast and can use the extra efund dollars for 2026 Roth IRA contributions.
Good luck OP. Sorry you’re going through this.
Cash is king. Cut whatever expense you can, including the 401k contributions beyond whatever they match (keep the free money) and *get very active in finding a new job.*
You can always up your 401k contribution at the new employer if you have extra cash. Job hunting is hard right now, so you have no idea how long it will take. Make it an **urgent priority** to search hard immediately.