How long can you contribute to a 401k?

A 401(k) plan is one of the popular ways that American workers use to save for retirement. Usually, 401(k) plans are offered through employers, and you will be allowed to decide how much to contribute to the plan each year.  Your employer will then deduct the contributions directly from your paycheck, and deposit the funds to your retirement account.

As long as you are still working, you can make the full contribution to your 401(k) up to the annual IRS limit regardless of your age. You can continue contributing to the 401(k) even after 72. If the employer offers a 401(k) match, you will continue receiving the matching contributions as long as you are still working for your employer. 

How 401(k) contributions work

Once you join a 401(k) plan, you must decide how much to contribute to the retirement plan, and authorize the employer to withhold a specific percentage of your paycheck. The employer will deposit the withheld funds into your 401(k) plan. 

A 401(k) plan is funded with pre-tax dollars, and you will only pay taxes when you withdraw money from the account. The IRS allows retirement savers to deduct the contributions made to a 401(k) from the taxable income for the year.

If you have a Roth 401(k), you will pay taxes upfront when making contributions to a 401(k). When you withdraw funds from the Roth 401(k), you won’t pay taxes if you are at least 59 ½ and you have held the account for at least five years since the first contributions.

Can you contribute to a 401(k) after retirement?

Once you retire or leave your employer, you won't be allowed to make further contributions to the 401(k). If you want to continue making retirement contributions, you will need to open an IRA account with a bank or trustee, and rollover the 401(k) to the IRA account.

You can make tax-deferred contributions to an IRA over your working years, even after you turn 70 ½. Before the SECURE Act, traditional IRA account owners were not allowed to contribute to the account after 70 ½, but this was overturned when the SECURE Act was enacted into law.

When rolling over to an IRA, you should request the plan administrator to transfer the funds directly to the new IRA provider. This form of rollover does not have tax implications. Alternatively, you can request a payout via check, and you must deposit the funds to an IRA within 60 days to avoid owing taxes and penalties.

Can you contribute to a 401(k) after 70?

If you are already 70 and still working, you can make the full contribution to a traditional 401(k). As long as you own less than 5% of the company you work for, you won’t be required to start taking the required minimum distributions (RMDs) from the account.

If you are 72 or older and you own more than 5% of the company you work for, you must start taking the mandatory distributions from the 401(k). However, if you own less than 5% of the company and you are still working, you can continue contributing to the 401(k).

Before the SECURE Act, workers lost the ability to contribute to a 401(k) once they hit 70 ½. However, under the SECURE Act, there are no age restrictions, and workers above 70 can contribute to a 401(k) as long as they are still working.

How much can you contribute to a 401(k) per year?

In 2022, you can contribute up to $20,500 to a 401(k). If you have multiple 401(k) accounts, the cumulative annual contributions cannot exceed the $20,500 annual limit.

If you are 50 or older, you can make an extra $6,500 contribution, which increases the total contribution for the year to $27,000.

If your employer offers a 401(k) match, you will receive matching contributions to your 401(k) account up to a certain limit. The total employer and employee contributions should not exceed $61,000 in 2022, or $67,500 if you are 50 or older.

Age Factor in Retirement Contributions

If you start saving in your early 20s, your retirement money will have a long time to grow through compounding. The small periodic contributions will grow into an impressive amount by the time you retire.

However, if you start contributing later in your 40s, you will need to save more to catch up with participants who started contributing earlier in their careers. You can increase your 401(k) contributions to between 15% and 20% of your salary.

If you are at least age 50, you are entitled to catch-up contributions to make up for the years you did not contribute. The extra $6,500 catch-up contributions can increase the annual 401(k) contributions from the IRS limit of $20,500 to $27,000 in 2022. 

You can continue contributing to your 401(k) even after attaining retirement age as long as you are still working.