Using a 401(k) plan can supercharge your retirement nest egg because of the tax breaks the plan offers. However, the IRS limits the amount that you can contribute to the plan each year, and you don’t get to contribute extra in future years if you don’t max out your 401(k) plan contributions in prior years. To boost your retirement savings, it’s important to contribute before the deadline for making 401(k) contributions each year.
TL;DR (Too Long; Didn't Read)
The due date for making 401(k) contributions is the deadline for filing your tax return, including extensions.
Deadline for Making 401(k) Contributions
The official deadline for making contributions to a 401(k) plan is the due date for your tax return for the year in which the contributions are being made. So, while you can’t backdate a 401(k) contribution, under the tax code you can make 401(k) contributions as late as the deadline for the company to file its taxes, including any extensions. For example, if you’re self-employed, you might not make your 401(k) contribution to your solo 401(k) plan for 2017 until April 1, 2018. Or, a company might not make a safe harbor 401(k) contribution for each of its employees until the following calendar year.
401(k) Plan Rules Vary
Just because the IRS allows a 401(k) plan to offer a benefit doesn’t mean every plan will do so. So, if you’re an employee, your company’s 401(k) plan might not allow you to make contributions count for a prior year because you may be limited to making contributions only through payroll deductions. However, if you’re self-employed and are looking for last-minute ways to make contributions to lower your tax burden, a last-minute 401(k) contribution could be an option.
401(k) Contribution Deadline 2018
The tax-filing deadline for the 2018 tax year is April 15, 2019. However, if you file for an extension, you’re allowed until October 15, 2019 to complete your return, which also means you have until that time to make your 401(k) contributions if allowed under your 401(k) plan. In 2018, the maximum contribution to a 401(k) plan is $18,500 if you’re under 50 or $24,500 if you’re 50 or older, an increase of $500 from the previous year.
401(k) Contribution Deadline 2017
The tax-filing deadline for 2017 is April 17, 2018, and taxpayers who file for an extension have until six months from the typical due date of April 15. So, the last day to contribute to a 401(k) for 2017 is October 15, 2018. In addition, the 401(k) contribution limits in 2017 are $18,000 if you’re under 50 or $24,000 if you’re 50 or older.
- IRS: Publication 560 – Retirement Plans for Small Business
- IRS: 401(k) Plan Overview
- MarketWatch: Can I Write a Check to My 401(k)?
- IRS: IRS Announces 2018 Pension Plan Limitations; 401(k) Contribution Limit Increases to $18,500 for 2018
- IRS: 2018 Tax Filing Season Begins Jan. 29, Tax Returns Due April 17; Help Available for Taxpayers
Based in the Kansas City area, Mike specializes in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."