A combination of factors may have many workers receiving an extra paycheck in 2008.  This is due largely to 2008 being a leap year and partially due to the fact that January 1st, 2009 is a bank holiday and falls on a Thursday.  The leap year means that there will be 53 Tuesdays and Wednesdays this year, where normally only one day of the week has an extra occurrence.  What all of this means is that if you receive a paycheck on a Tuesday, Wednesday, or Thursday, you may have already heard from your employer about receiving an extra paycheck this year.  Whether your pay was scaled throughout the year to reflect this, or if you will simply be receiving one less paycheck in 2009 varies by employer.  In any event, the result could impact your income taxes for the year as well as your 401k.  The former is true for those who will have 53 paychecks reported in this tax year.  The latter is of importance for those who max out their 401K.  The 401K max is of more importance here, so let’s look at it a little more closely.

As I discussed in Getting the Maximum Out of Your Company’s 401K Match, you want to ensure that you don’t hit the maximum contribution allowance before your final paycheck of the year.  If you do, you’ll probably be giving up some of your employer matching.  The extra paycheck this year could throw even a perfectly timed plan into this exact scenario.  If you had your withdrawals configured so that the 52nd paycheck of the year brought you to the maximum allowed contributions, none will be made on the extra paycheck and so no matching will occur as well.  There’s still time to change your contributions for the rest of the year, so a slight tweak may be all that is required to avoid this undesirable situation.