I hate accounting policy.

For my 403(b) retirement plan, my employer contributes “5% of [my] base salary up to $34,000; 10% of [my] base salary above $34,000.”  If I make (hypothetically) $68,000, then I should get 5% on half of it, and 10% on the other half — 7.5% on average.  That’s $425 per month.

Sixth graders, are you following this?

Now let’s all guess why my last paycheck shows only $283 (adjusted for my hypothetical salary, of course).  What happened to the other $142?

It turns out my “averaging” technique is wrong.  My employer will contribute 5% until they’ve covered $34,000 in earnings, and then switch to paying 10% for the rest of the year.  Most years this is perfectly fine, since I can’t spend this money until long after the year ends, so the total is what counts.

However, what about this year?  If I was only eligible to join the plan in July (halfway through the year), then I’ll only see 5% contributions all year!  I miss out on that 2.5% difference.

Of course, I used a $68,000 example salary to make the math easier, but really anybody who makes more than that cutoff amount suffers to some degree.  I’m outraged!

(Okay, I’m not really outraged, but I am mildly disappointed to learn that some of my unhatched chickens will never hatch—and they were my retirement chickens!)