Can You Still Max Out Your 401(k) 2014 Contribution Limit?

It's almost April already, and your retirement savings are nowhere near the contribution limit. But you might still have time to add funds -- to the right kind of plan.

Mar 27, 2014 at 2:00PM


Let's work together to keep this number as low as possible, shall we?

Editor's Note: A previous version of this article incorrectly stated that all employee-participants in 401(k) plans can still make contributions for the 2013 tax year until April 15, 2014. This option is not available for most 401(k) participants. The author and the Fool regret the error.

The April 15 deadline for filing federal income tax returns is looming large these days. Maybe you're still working on your 1040 forms and cursing under your breath for missing out on retirement account deductions.

Don't panic. Did you know that you might be able to contribute funds to your IRA under the 2013 tax year -- all the way until the April 15 filing deadline? That's true for traditional and Roth IRAs, and even for certain self-employed options like SEP-IRAs, SIMPLE IRAs, and solo 401(k)s so long as you've done the necessary prep work beforehand.

More importantly, though, you should now be thinking about getting to the maximum 401(k) 2014 contribution limit. For most 401(k) participants, the annual limit for 2014 is $17,500, plus an additional $5,500 catch-up contribution if you're aged 50 or older.

Don't scoff at these 401(k) contributions. Every person's situation is different, but almost all of us can make a huge difference to our annual tax bills by contributing to a 401(k). Even if you can't afford to max out your retirement contributions, it's worth considering to see if you can collect matching contributions from your employer and other incentives.


Here's where the magic happens.

401(k) contributions are deducted from your salary before the paycheck is cut, printed, and sent home. For traditional 401(k) contributions, by reducing your top-line income directly, this move creates the same effect as a juicy $17,500 tax deduction.

The process is a little different for IRA contributions, and you'd use a different Form 1040 line to report last-minute extra contributions that weren't simply drawn from your pre-tax earnings. But it's still a direct benefit that reduces your total tax bill.

Roth 401(k)s and IRAs are different again. Here, you contribute to your IRA with regular after-tax dollars. The tax benefit comes at the end, when you get to withdraw funds from the account without paying taxes on the withdrawals. Regular IRA accounts and 401(k) plans have taxable withdrawals at the end of the road.

Contributing to a retirement plan may be the most important financial decision you'll ever make.

An automatic payday contribution doesn't hurt your monthly paycheck that much, but it can still make your retirement much more comfortable. Fellow Fool Anand Chokkavelu recently recounted how the most financially irresponsible man he knows decided -- almost at random -- to take part in his employer's 401(k) plan -- and now he's watching a $50,000 retirement fund grow without lifting a finger to maintain it.

And it's no secret that the stock market generally rises in the long run. You don't even have to beat the market to secure a generous long-term return. Over the last 20 years, the Dow Jones Industrial Average (DJINDICES:^DJI) -- which arguably represents the market -- has more than quadrupled in value. That's despite going through one recession and the dot-com crash.

^DJI Chart

^DJI data by YCharts.

So if you haven't made a 2013 IRA contribution yet, don't delay -- make it today. 401(k) plans are great, what with their employer matching policies and low maintenance. But sometimes the flexibility of an IRA lets you do things that a 401(k) plan won't allow.

Meanwhile, take steps now to take maximum advantage of your 401(k) 2014 contribution limit. The sooner you act, the less you'll have to worry about come tax time next year.

Start your journey to stock market riches today
Maybe your 401(k) account is fully stocked with fresh funds -- but you have no idea how to actually invest it all. It's OK, you're not alone. Millions of Americans have waited on the sidelines since the market meltdown in 2008 and 2009, too scared to invest and put their money at further risk. Yet those who've stayed out of the market have missed out on huge gains and put their financial futures in jeopardy. In our brand-new special report, "Your Essential Guide to Start Investing Today," The Motley Fool's personal finance experts show you why investing is so important and what you need to do to get started. Click here to get your copy today -- it's absolutely free.

Anders Bylund has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers