With your stem at its maximum height, your stem top cap will sit directly on top of your stem. If you decide to move your stem downwards, removing washers from below the stem, you’ll have to replace them above the stem, so that they bear down on the top of it when you adjust the top cap. Excess steerer tube will then protrude above the stem.
Mechanically, this works perfectly well, but it’s not particularly attractive and will hurt if you land on it in a crash. It’s a bit of extra weight that you don’t need to carry around, too. So, once you’re sure that you prefer the new, lower stem height – and do be sure because cutting off excess steerer tube is easy, making it longer again means buying a new pair of forks – cut off the protruding part. You’ll also need to do this when fitting a new pair of forks – they are always supplied longer than you would ever need and are then cut down to length – this is much cheaper for suppliers than making a selection of different steerer lengths.
Start by very carefully marking the place to cut. It’s easy to get confused and cut off too much, leaving you with a useless pair of forks. Marker pen works well. Assemble the fork completely, including the stem. Mark the point where the steerer tube comes up out of the top of the stem. Draw the line all the way around the top of the stem. Remove the forks from the bike again.
If you are shortening previously fitted forks, you need to check the position of the star-fanged nut inside the steerer tube. You can see it if you look down into the steerer tube from above – a short length of thread mounted in a domed, fanged plate. The fangs point slightly upward, so that, as you tighten the top cap, they are forced into the inside wall of the steerer tube. This means that the more you tighten the top cap, the firmer the star-fanged nut wedges itself in place.
The star-fanged nut needs to sit just inside the steerer tube so that the top of the nut is about 10mm (3⁄8 inch) below its top. When cutting down forks, you will often find that the current position of the nut is just exactly where you want to cut the tube. If this is the case, it’s best to move the nut down the tube so that you can reuse it. Thread a long 6mm (1⁄4 inch) bolt into the star-fanged nut and tap it down gently with a hammer until it lies about 10mm (3⁄8 inch) below the level of the line you’ve marked. Be careful to knock it in straight, don’t let it drift to one side.
Cutting the steerer tube
Now you’re ready to cut the steerer tube. It’s worth holding the forks up against the bike as a final check that you’ve measured correctly before you start cutting. The forks will need to be clamped securely while you cut them, but it’s vital not to squash the steerer tube. Soft vice jaws, made of wood or plastic, work fine as long as you’re careful not to overtighten the vice. If you have a scrap of wood (a 50mm (2 inches) cube is perfect) and a drill, cut a hole that’s about the same diameter as the steerer tube (25mm (1 inch) should be fine) through the length of the wood. Then cut the wood in half across the middle of the hole and along its length. You will end up with two blocks of wood, each with a semicircular channel. Place these on either side of the steerer tube so that you can clamp the steerer tube firmly in the vice without squashing it.
You need to cut the steerer tube 2–3mm (around 1⁄8 inch) shorter than the mark you’ve made. Draw a new line, all the way around the steerer tube – it’s important that the cut is flat and square. Cut carefully, checking that you’re not trying to cut through the star-fanged nut as well – you may find that you need to knock it through a little further. File off sharp edges because the stem needs to be able to slide freely over the steerer tube without scratching. Clean off any metal shavings and filings; these will play havoc with your headset bearings if they work their way in there.
If you’re fitting new forks, or you cut the star-fanged nut off, you’ll need to fit a new nut. They have two parallel-toothed plates. Both plates are slightly curved – the nut sits in the fork, so that the teeth point upward. Screw the new star-fanged nut onto a long (45mm or so) bolt – the usual size is 6mm, but some nuts take 5mm. Protect the dropouts at the bottom of the fork by standing them on a piece of wood. Take special care if you have adjuster knobs or valves protruding from the bottom of the fork legs – support the forks so that these parts don’t come into contact with hard surfaces, as they will bend or break. Tap the top of the bolt, knocking the star-fanged nut into the top of the steerer tube. Take care to keep it vertical. It should sit 10–20mm (3⁄8–3⁄4 inch) below the top of the steerer tube.
“Cutting off excess steerer tube is easy, making it longer again means buying a new pair of forks”
Source : BIKE MAINTENANCE TIPS, TRICKS & TECHNIQUES
See also bike maintenance tips, tricks and techniques “Aheadsets: adjusting stem height”