How to Add to a 401(k) at the End of a Year

by Cindy Quarters

A 401(k) is a type of retirement plant that helps working people save part of their income towards retirement. Traditional 401(k) plans allow you to contribute pre-tax dollars, reducing your tax liability for the year in which you contribute. Depending on your situation, there are two main ways you can add money to your account at the end of the year in order to gain as much tax benefit as possible from the account. One way involves changes in the amount of your contributions, and the other way is to make a single lump-sum addition to your 401(k).

Regular Contributions

1. Refer to your summary plan description (SPD) to see what types of contributions your plan allows. Most plans will let you change your payroll deduction to any amount you wish, up to and including 100% of your salary, as long as you don’t go over the annual cap. As of the time of publication, you are limited to $16,500 if you are under 50, and for those 50 and over the annual contribution limit is $22,000.

2. Request the form to change your 401(k) plan withholding amount. Normally, either your human resources department or your supervisor will be able to provide this to you or direct you to the appropriate person. Ask well ahead of the change date, as it may take some time to get the form processed and have the changes implemented.

3. Increase your contribution to reflect the amount you wish to put in your account. If you do this for the last one or two paychecks of the year it will give you a year-end increase of whatever amount you have specified.

4. Repeat the process of changing your contributions, this time changing back to your regular level after your year-end contributions have been made. Make sure you do this in time to be reflected on your first paycheck in January.

Lump Sum Contributions

1. Determine if your plan allows a lump sum contribution by reviewing the summary plan description, known as the SPD. Virtually anyone who is self-employed can use this option. Some companies also have plans that allow employees to do this.

2. Contact the appropriate person for the form you need to accompany a lump sum contribution. If you are an employee this may be your manager or a representative in the human resources department. If you are self employed ask your contact at the financial institution where you have your 401(k).

3. Fill out the form and return it, along with the funds, to the contact person. Be sure to make this transaction in time for it to be recorded before the end of the year. Keep your receipt in case there is any question about the date or the amount when you are filing your taxes for the year.


  • Keep a copy of your SPD where you can find it, as it will answer many questions about what your plan does and doesn’t allow.


  • Even though it offers tax benefits, don’t contribute more than you can afford to your 401(k), because it is hard to access it if you need it before retirement.
  • Be sure your end-of-the-year contributions don't put you over the limit for the year, since there are tax penalties if you contribute too much.

Items you will need

  • Summary plan description
  • 401(k) contribution form

Photo Credits

  • Zedcor Wholly Owned/ Images