Can I still make a contribution to my 401k if i have been laid off?

I want to contribute to the end of the year to maximize my tax write off (even though there will be no match). Is it up to the individual employer to allow or not allow this. Is this advisable to do? I read so many advise to roll over to an IRA but can I continue to contribute to an IRA as I would a 401k. Need help

I want to contribute to the end of the year to maximize my tax write off (even though there will be no match). Is it up to the individual employer to allow or not allow this. Is this advisable to do? I read so many advise to roll over to an IRA but can I continue to contribute to an IRA as I would a 401k. Need help understanding this.

Best Answer:

Sue: Since 401k contributions are through payroll deductions only, you cannot contribute if not on the payroll.

IRA contribution limits are totally separate from 401k limits. However, if you were "eligible" for an employer sponsored plan (like 401k) in a particular year, you may be limited on the tax deduction of traditional IRA contributions. The current annual contribution limit for all IRA's total is currently $5000 ($1000 more if age 50 or older). If your tax deductible amount is limited, you may be able to contribute the rest to a Roth IRA. Contributions to a Roth IRA are not deductible, but qualified gains are never taxed and there is no required minimum distribution regardless of age.

See IRS Publication 590.

Other answer:

Sue:
No. A 401k is an employer sponsored account. If you don't have an employer, then…..
Eva:
Since a 401k is funded through salary deferral, you can no longer contribute once you've left the company. A traditional IRA has a much lower limit of $5500 ($6500 if you're over 50). You can contribute to an IRA as long as you have W2 wages or self employment income. The deductability of the contributions would depend on your income. Make an appointment with a financial advisor.
Wayne Z:
No.

401k contributions are only though payroll. If you are not receiving a wage/salary, there is no way to contribute.

Annual IRA limits are much lower.

Leave a Reply

Your email address will not be published. Required fields are marked *