How much can I contribute?

  1. In calendar year 2019, $19,000, but no more than 100% of your paycheck (less FICA taxes). Some plans, for IRS considerations, may impose lower limits for some or all plan participants. (In calendar year 2020, the dollar limit is $19,500.)
  2. If in calendar year 2019 you are age 50 or older, you can also make a catch-up contribution of $6,000 in addition to the $19,000. (In 2020, the catch-up increases to $6,500.)
  3. These dollar limits can increase year-by-year given inflation and IRS rules.
  4. Certain employees designated by the IRS as “highly compensated” may not be able to defer as much as they might otherwise prefer. If you are impacted by these IRS rules, your HR department will undoubtedly inform you of your deferral limitations.

My 401(k) allows for Roth contributions. Can I “double up” my contributions?

No. While you can make both Roth and “traditional” 401(k) contributions, the total contributions into your 401(k) cannot exceed the current year’s dollar limitations (or a lesser amount if your compensation is less than the dollar limitations).

Can I make a 401(k) contribution from my savings account later in the year to catch up?

  1. No, contributions to a 401(k) must be deducted from your paycheck.
  2. PLANNING TIP: It might be possible to contribute 100% of your paycheck into the 401(k) late in the calendar year and use your savings to make up for the lost take-home pay. Ask your payroll department about the frequency with which you can change the amount coming out of your paycheck.

I changed jobs this year. What if I contributed this year to my former employer’s 401(k)?

  1. 401(k) contribution limits are not “per plan” but “per calendar year”. The amount you contributed into another plan in the current year will reduce the amount you can contribute to your new 401(k) plan.
  2. When participating in two 401(k) plans in the same calendar year, neither your former employer nor your current employer must monitor how much you contribute in total for the year: it’s your responsibility to track this.  If you contribute too much, there are potential adverse tax implications to you when you file your tax return for that year.

Can I make a contribution to a former employer’s plan?

No. Contributions to a 401(k) must be made from your paycheck. Once you stop getting a paycheck from an employer, your ability to defer into that company’s 401(k) plan also stops.

Can I make a contribution to my 401(k) for my spouse?

No. But most likely you can make an IRA contribution for your spouse.  See the FAQs on IRAs.

Must my employer offer a 401(k) plan?

No. If you employer does offer a 401(k), consider yourself one of the lucky ones:  More than half of all workers in the United States do not access to a workplace retirement plan!  Your employer undertakes significant cost, operational aggravation, and fiduciary liability to make a 401(k) available.  Take advantage of it!