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smakbagshaw
New Member

Are 401k contribution limits prorated the year I retire?

Are 401k contribution limits prorated the year I retire?  If I work less than 12 months, does the 19,500 limit need to be prorated?

3 Replies
macuser_22
Level 15

Are 401k contribution limits prorated the year I retire?

No.  The limit is for the year, not the time you work.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
DoninGA
Level 15

Are 401k contribution limits prorated the year I retire?

Also notehttps://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-401k-and-profit-sha...

 

Catch-up contributions for those age 50 and over

If permitted by the 401(k) plan, participants age 50 or over at the end of the calendar year can also make catch-up contributions. You may contribute additional elective salary deferrals of:

  • $6,500 in 2021 and 2020 and $6,000 in 2019 - 2015 to traditional and safe harbor 401(k) plans
     
  • $3,000 in 2021 - 2015 to SIMPLE 401(k) plans
     
  • These amounts are subject to cost-of-living PDF adjustments

You don’t need to be “behind” in your plan contributions in order to be eligible to make these additional elective deferrals.

fanfare
Level 15

Are 401k contribution limits prorated the year I retire?

since contributions must be deducted from your paycheck, leaving early is a form of prorating.

But if your paycheck is large enough you may hit the limit on your first paycheck.

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