How old do you need to be to get a 401k?

A 401(k) plan provides a great way for workers to build a retirement nest egg. If your employer offers a 401(k) plan, you should find out the eligibility rules to know when you are eligible to participate in the plan. Although most 401(k) plans offer automatic enrollment to new employees, some 401(k) plans require employees to have attained a specific age to be eligible to participate in the 401(k) plan.

Once you are at least 21 years or older and have worked for the company for at least one year, the employer is obligated to allow you to participate in its 401(k) plan. However, these participation rules do not dictate when someone can join a 401(k) plan, and most employers allow younger employees below age 21 to participate in the 401(k) plan activities.   

401(k) plan eligibility

Most employers offer new hires automatic enrollment into the company’s 401(k) plan. However, some employers may have certain minimum requirements that new employees must meet before they can participate in the 401(k) plan.

The key requirements that 401(k) plans may require new employees to meet include:

Age requirement

The age requirement prevents employees who are below a certain age from participating in the company’s plan. In this case, the cutoff age is 21 years. If you are at least 21 years old, your employer must allow you to enroll in the company's 401(k) plan.

Service requirement

The service requirement is the number of hours within a specific period that employees must have worked to be eligible for plan participation. 401(k) plans can use either the elapsed time method or the counting hours method to credit service. Both methods count the service duration starting from the date of hire. The maximum service requirement is 12 months or at least 1000 hours of service.

Maximum Age for 401(k) enrollment

There is no maximum age for participating in a 401(k) plan. If you are above age 72, and still working, you can contribute to your employer’s 401(k) plan to take advantage of the benefits that your plan offers and receive matching contributions from your employer.

Who is a long-term part-time employee?

Initially, 401(k) plans excluded employees who worked less than 1000 hours annually from plan participation. However, the SECURE Act introduced the concept of long-term part-time employees to provide a reprieve to part-time workers who were excluded from 401(k) plan participation.

A long-term part-time employee must work at least 500 to 999 hours in the last three consecutive years. These employees must also meet the age requirement for plan participation i.e. be at least 21 years old.

The eligibility period for long-term part-time workers started counting in 2021, and they can enroll in 401(k) plans starting from 2024. However, nothing prevents 401(k) plans from allowing participation sooner, before 2024.

Can an 18-year-old get a 401(k)?

In most states, 18 is the age of competence, and this means you are eligible to enter into contracts. Once you turn 18 and you are working, you can enroll in your employer's 401(k) plan and start saving for your retirement. You can also choose where to invest your 401(k) money based on the investment options provided by your employer.

An IRS Report on 401(k)s plan participation found that 13% of 401(k) plans have a minimum age requirement of 18 years, while 20% of 401(k) plans do not have an age requirement.

Employee Entry Date for 401(k) Plans

A 401(k) plan’s entry dates determine when an employee can enroll into the plan after attaining eligibility. If you meet the age or service requirements of your 401(k) plan, you can join the plan during the immediate entry date.

However, there are no specific requirements for 401(k) entry dates. The most common entry date is the first day of the calendar quarter after meeting the eligibility requirements i.e. January 1, April 1, July 1, and October 1. You should check the 401(k) plan description to know the employer's entry dates for plan participation.

401(k) eligibility for Employer contributions

If the company offers a 401(k) match, you may be required to meet certain requirements to receive employer contributions.

One of these requirements is that an employee must have completed a certain period of service in the company. For example, new employees may be required to complete at least one year of service to be eligible for 401(k) matching.

The employer may also require employees to be employed on the last day of the calendar year or complete a specific number of hours annually to receive the matching contributions made during the year. If an employee quits during the year, they are deemed to have forfeited the employer contributions for that year.