Timing of 401k Contributions

This year the maximum for someone under 50 to contribute to 401k. Is there an advantage over the course of a career to contribute this money front-loaded at the beginning of the year rather than distributed evenly during the year?

A couple considerations - assume with the front-loading I still contribute enough throughout the year to take full advantage of employer match.

Also, I know financial advisors generally recommend even contributions. The reasoning typically focuses on not trying to second guess the market, and with the even contributions you get dollar cost averaging. However, I’m not talking about timing the market here, but contributing in a pattern year after year that puts most of the money in the account during the first few months.

Definitely interested in hearing from our financial Dopers.

Let’s use some other term than “front loading” since that term has another specific meaning when it comes to mutual funds. Keep it simple, lets just say “putting the money in early.”

It sounds like you’ve been listening to a broker selling IRA’s. The traditional pitch goes like this…

You don’t have to make this year’s contribution until April 15 of next year, but by making the contribution early (read: NOW) your money has the advantage of going to work for you this very minute.

That might work if you were investing in a CD or some kind of money market account that retains it’s value and throws off interest.

But most people are in stocks or stock invested mutual funds.

In that case putting money in your account early might work when the market is going up, but what would have happened if you put all that money in…say…the first quarter of 2000? You would have watched that money join the great bear march south.

The dollar cost averaging of the standard 401(k) is fine in most cases.

Your advantage, of course, is that you will get another X months for your money to appreciate in value.

If you’re not worried about market timing, this is the thing to do.