A 401(k) match true-up is an extra employer contribution, made after the plan year ends, that tops up an employee’s match to the full amount the plan’s annual formula promises. Many employers deposit the match each paycheck, so workers who change their deferral rate, start or stop contributing mid-year, have uneven pay, or hit the IRS deferral limit early (after which the per-paycheck match stops) can end up with less than the annual formula would give. In a true-up, the match is recalculated using full-year pay and contributions, and the employer deposits any shortfall.
For example, Gusto describes an employee earning $200,000 under a 50% match on the first 6% of pay who maxes out by her 15th paycheck: she receives $3,750 during the year, the annual formula gives $6,000, so the true-up is $2,250. A true-up only adds money; it never takes back match already deposited. Not every plan includes a true-up provision, so check your plan document.
Source: Gusto Help Center, “Understanding the annual 401(k) match true-up”
Image: Deposit into piggy bank by Ken Teegardin, CC BY-SA 2.0, via Wikimedia Commons.