How to Start a 401(k) Plan With No Retirement Savings Over 40

Put as much as you can each year into your 401(k) after age 40.

Put as much as you can each year into your 401(k) after age 40.

They say it's never to late to start saving and investing. Still, if you have reached age 40 and have not accumulated even a small retirement fund, you have a lot of catching up to do. An employer-sponsored savings plan, like a 401(k), 403(b) or 457, is a good place to start. The Internal Revenue Service allows a sizable yearly contribution, and if your employer offers matching contributions, you'll be able to add free money to your nest egg.

Pick up the necessary forms from the human resources department or benefits administrator of your employer, or download them from the company intranet. Fill in your name and contact data, along with how much you want deducted per paycheck. You may need to fill out a separate form authorizing the payroll department or processor to deduct the amount you want deposited to your 401(k) each month.

Make your investment choices. The selection varies by employer, but at age 40 you might want to avoid weighting your portfolio in favor of risky investments, choosing instead stocks of stable companies, mutual funds, bonds and bond funds. If you do decide to go for risk, limit it to no more than 40 percent to 50 percent of your 401(k) portfolio.

Max out your 401(k) each year. As of 2013, the IRS allows a yearly contribution of $17,500. It's a lot more than you can put in an IRA each year, and the funds grow tax-deferred, so it's an excellent catch-up opportunity.

Take advantage of any available employer matching. How much the employer will put in to your 401(k) varies by company, but firms often match your contribution dollar-for-dollar to a certain limit. For example, the employer might match what you put in to a limit of $5,000 per year.

Keep an eye on the progress of your investments. It's easy to make your choices and then forget the whole thing, but vigilance is necessary, especially when you're making up for lost time. Check your online or printed statement at least two to three times per year. If one or more of your investment choices appears to be headed permanently in a negative direction, you may need to rethink your selections.


  • When you reach age 50, you'll be able to put an additional $ 5,500 per year into your 401(k), as of tax year 2013. The IRS terms the extra money a catch-up contribution.

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D. Laverne O'Neal, an Ivy League graduate, published her first article in 1997. A former theater, dance and music critic for such publications as the "Oakland Tribune" and Gannett Newspapers, she started her Web-writing career during the dot-com heyday. O'Neal also translates and edits French and Spanish. Her strongest interests are the performing arts, design, food, health, personal finance and personal growth.

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