Can an employee still contribute to their employer sponsored 401?

Forum|Forum|4 years ago
April 14, 2022
5 replies
26 views

My clients (married filing jointly) contribute to a 401k and 403b. Can they still make a contribution to their employer sponsored plan to lower their taxable income for 2021? Does it depend on the employer? This should produce a W2C which would show the reduced taxable income.

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Best answer by qbteachmt

It's a bit late to Withhold from a 2021 paycheck, don't you think?

qbteachmtAnswer

Level 15

It's a bit late to Withhold from a 2021 paycheck, don't you think?

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R

rw4330Author

Level 2

Yep - I do think. Hence my question. Everyone has a first time circumstance. This is mine. Thanks for your thoughtful answer.

qbteachmt

Level 15

If it will help make sense further: individuals might not know their contribution limit until the tax return is done, so we have until that date to contribute to our own retirement accounts for the prior year. The same is true for an employer; the business return will give them some info upon which to base, for instance, profit sharing or nonelective contributions.

But the employee is deferring Wages. That means from Paychecks for the year. Not from a different or for a different year.

That's also why the employer's Plan needs to be established by the end of the year for the year under consideration. Otherwise, it isn't in time for that year, for the employer contribution.

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