Cut Off Date for Making Contributions to 401(k)

Max out your 401(k) by the tax filing deadline.

Max out your 401(k) by the tax filing deadline.

Contributing to a 401(k) account can be one of the easiest ways to save for retirement. The automatic contributions that go straight from your paycheck to your retirement account not only help to reduce your tax liability but also have the benefit of tax-deferred growth. If contributions need to be made after the tax year ends on Dec. 31, this can be done up to the tax filing deadline with instructions for the funds to be applied to the expired tax year.

Contribution Limits and Deadlines

Contributions can be made to your 401(k) once the tax year ends up to the tax filing deadline. If an extension is filed, contributions can be made up to Oct. 15. The contribution limits for 401(k) accounts adjust each year due to inflation. The maximum amount that you can contribute in 2013 is $17,500. In 2012 it was $17,000. If you exceed the specified amount in contributions, you could be subject to a tax penalty.

Contributing After Dec. 31

There are several reasons why someone would make contributions after the tax year ends. For example, if your 401(k) is established late in the tax year, you are likely to have plenty of margin left for additional contributions after Dec. 31. You may also elect to have contributions marked for the previous tax year if you will benefit more by having the tax deduction in the specified year than in the current year.

Employer-Sponsored Retirement Plans

As you prepare to adjust your contributions and add extra money to your 401(k), it is important to keep in mind that only those contributions made with funds withheld from your wages are tax-deductible. "Even though these employee contributions are not deductible," the IRS notes, "the earnings on them are tax free until distributed in later years." You cannot simply make a contribution from another account. You will likely need to go through your payroll department to make all contribution adjustments.

Catch-Up Contributions

In order to make a catch-up contribution, you must be age 50 or older. This type of contribution allows an additional $5,500 to contributed be to your 401(k) account. Similar to the normal contribution limits, this catch-up contribution amount can be adjusted based on inflation.


About the Author

Dominique Broadway is a financial planner and personal finance coach in Washington, D.C. She is also the founder of a financial services program and contributes regularly to various online publications. Broadway holds a master's degree in financial management, as well as Series 6, 7 and 63 licenses.

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