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Let's say I open a 401(k) account in December 2016. When is the deadline for contributions to the plan for the current tax year? Is it December 31 2016 or April 15 2017?

Also: Can I contribute to the full amount of $ 18,000 or is the maximum amount limited on a "monthly" basis?

Edit: I am a regular employee, not self-employed.

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    401k contributions come directly from your salary. Unless you make 18000 $ on one paycheck, you cannot put 18000 $ in the account in one step. - my employer does deposit some amounts in early Jan, as the paycheck contains salary for the old year. So it must be allowed for some days into the new year at minimum. – Aganju Dec 20 '16 at 11:46
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    Are you self-employed, or a W-2 employee? – JTP - Apologise to Monica Dec 20 '16 at 15:50
  • Regular employee. I updated the question. – Freddy Dec 20 '16 at 18:49
  • I think that your payroll department is where you should direct this question. If you have $18,000 lying around to shove into a 401K then they would have to somehow retro-actively calculate that into your tax return for the 2016 year. Sounds horrifically messy and I doubt payroll would willingly go down that road. I have no source for this and the the statement made by @Aganju sounds spot-on. – MonkeyZeus Dec 21 '16 at 19:20
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By definition, this is a payroll deduction. There's no mechanism for you to tell the 401(k) administrator that a Jan-15 deposit is to be credited for 2016 instead of 2017. (As is common for IRAs where you do have the 'until tax time' option)

If you are paid weekly, semi-monthly, or monthly, 12/31 is a Saturday this year and should leave no ambiguity about the date of your last check.

The only unknown for me if if one is paid bi-weekly, and has a check covering 12/25 - 1/7. Payroll/HR will need to answer whether that check is considered all in 2016, all in 2017 or split between the two.

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  • What the check covers is not relevant; the date of the check is since the employee did not make the contribution unttil the employer withheld it from the wages and sent the money to the 401k plan – Dilip Sarwate Dec 20 '16 at 21:19
  • Got it. This means the check dated 1/7 falls entirely in the new year, correct? I didn't want to assume this. – JTP - Apologise to Monica Dec 20 '16 at 21:29
  • I may be able to tell in two weeks. I'll get a biweekly check on Jan/6. – Aganju Dec 20 '16 at 22:37
  • Wow, I was just offering that as an interesting example. Nice coincidence, we'll look forward to your update! – JTP - Apologise to Monica Dec 20 '16 at 22:42
  • Although this is a corner case, I am interested in the result too. Thanks for the answer, JoeTaxpayer. – Freddy Dec 20 '16 at 23:55
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The deadline for contributing to a 401K is the last paycheck paid in December. That may not be the last pay period that ends in December. For example if the last pay period ends on Friday the 30th and you get paid on Thursday January 5th, that check is the first in the new year.

The US government has rules regarding how quickly the money needs to be sent to the 401K trustee. It is possible that the money may get there after the first of the year, but the important date for you is the date of the last paycheck in December.

The company form to set the contribution rate (it could also be on a website) will have a deadline to determine if the rate makes the next check or the one after that.

The form will also have a maximum amount as a percentage of the check. Some could allow up to 100% but yours might not. So how much you can put in with the last paycheck or two is up to company policy and your pay rate.

The company forms or website will describe how the company match works. If you were try and put as much as possible into a few checks, it is possible to hit the $18,000 yearly limit in just a small part of the year. In some companies that would mean that you could miss out on company match money, because that would never be more than x% of each check. For example if you were to put $3,000 per check with a base pay of $5,000 every two weeks and if the maximum company match was 5%. After 6 checks you would be done: you would have put in $18,000 and the company would have put in $250 x 6 or $1,500. If you were to spread the money over all 26 checks you would still put in $18,000 but the company would have put in $6,500.

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  • I believe contributions submitted after the first of the year can still apply to the previous year for tax purposes. If the pay period ends on 12/30/16 and the contributions aren't submitted until 1/5/17, those contributions still apply to 2016 (for most plans, not all). – Chris Dec 20 '16 at 14:16
  • Thanks for the reply. Do you have any sources for the deadline? I looked on the IRS website but didn't find any. – Freddy Dec 20 '16 at 18:48

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