The IRS allows 401k contributions to IRA accounts up to the tax filing deadline of the coming year, which in 2020 falls on Wednesday, July 15th. For SEP IRAs, if you file an extension you have until the extended filing deadline or when you file the return to make the contribution.\r\n401k Plans\r\nMost employer tax deductions for 401k contributions and other salary retirement plans usually apply only to the calendar year, in which they are actually withheld from the taxpayer's paycheck.\r\n\r\nYet, employers can make contributions until their tax deadline for the year (for 2020, the business typically has until April 15, 2021 of the next year for those on a calendar, fiscal year). This offers added flexibility for those doing one-time contributions, profit sharing, or other one-off arrangement. This also means an employee technically can make 401k contributions as late as the deadline for their company to file its taxes, including any extensions.\r\n\r\nAdditional time becomes especially apparent in the case of someone who is self-employed, who might not contribute to their solo 401k plan for a given year until tax time the following year. The ability to do so can depend on the business type and whether the contribution is by employee deferral or through a profit-sharing component.\r\n\r\n401k plans can vary--so we do recommend talking with an HR professional. Such as, contributions for a prior year may not be allowed because an employee is limited to making contributions through payroll deductions.\r\nWhat are the 401k contribution limits?\r\nTax deductible contributions to 401k plans and other retirement accounts are subject to IRS limits. These limits are given cost-of-living adjustments from time to time, and the IRS has just announced how those adjustments will affect contribution limits for 2020.\r\n\r\nThe 401k contribution limit for 2020 has been raised for employees who participate in 401k, 403(b), and most 457 plans to $19,500. If you\u2019re over the age of 50 your limit is $26,000.\r\nWhat is the maximum 401k contribution for 2020?\r\n\r\nEmployer matching contributions don\u2019t count toward this limit, but there is a limit for employee and employer contributions combined: Either 100% of your salary or $57,000 ($63,500 if you\u2019re over 50), whichever comes first.\r\nLimits for highly compensated employees\r\nIf you earn a high salary, you may be considered a highly compensated employee (HCE), subject to more stringent contribution limits. To prevent wealthier employees from benefiting unfairly from the tax benefits of 401(k) plans, the IRS uses the ADP test to ensure that employees of all compensation levels participate proportionately in their companies\u2019 plans.\r\nHow the CARES Act affects your 401k contributions\r\nThe Coronavirus Aid, Relief, and Economic Security Act (CARES Act) aims to help Americans cope with the unprecedented financial fallout from the COVID-19 outbreak.\r\nAmong its provisions, the CARES Act makes it easier to withdraw funds saved in certain tax-advantaged retirement accounts like your 401k and traditional Individual Retirement Accounts (IRAs). These temporary changes eliminate tax penalties on certain early withdrawals and relax rules on loans you can take from some types of accounts.\r\n\r\nLet\u2019s take a closer look at the retirement-related provisions in the CARES Act, and see which of them could help you cope with financial stresses stemming from the COVID-19 crisis.\r\nCARES Act eligibility\r\nNot all tax-advantaged retirement account holders can take advantage of the CARES Act\u2019s early distribution and loan provisions. Specifically, the legislation restricts relief to qualified participants with a valid COVID-19 related reason for early access to retirement funds.\r\n\r\nYou\u2019re qualified if:\r\n\r\n \tYou\u2019re diagnosed with COVID-19\r\n \tHave a spouse or dependent diagnosed with COVID-19\r\n \tExperiencing a layoff, furlough, reduction in hours, or inability to work due to COVID-19\r\n \tLack of childcare because of COVID-19\r\n\r\nWithout a valid Coronavirus-related condition, you\u2019ll need to play by the standard rules. But even if you meet one or more of these eligibility requirements, that does not necessarily mean you will be able to access money in your workplace retirement accounts. That\u2019s because the CARES Act does not require employers to follow the new, more permissive withdrawal and loan rules. Ask your plan sponsor first as not all retirement plans will accept the CARES Act provisions for COVID-19 related hardships.\r\nThe new CARES Act rules\r\nThe CARES Act allows eligible participants in certain tax-advantaged retirement plans \u2014 including 401(k)s, 403(b)s, 457s, and Traditional IRAs \u2014 to take $100,000 of coronavirus-related distributions from eligible retirement plans to qualified individuals, as well as special rollover rules with respect to such distributions. It also increases the limit on the amount a qualified individual may borrow from an eligible retirement plan (not including an IRA) and permits a plan sponsor to provide qualified individuals up to an additional year to repay their plan loans. Additionally, during the 2020 calendar year you won\u2019t pay the 10% penalty tax the law imposes on most retirement account withdrawals before an account owner is 59 1\/2. Note that this is $100,000 in total, per person, no matter how many retirement accounts you have. In addition, the act suspends the mandatory 20% tax withholding requirement that normally applies to early distributions from a 401k or other workplace retirement plan. (There is no withholding requirement on early withdrawals from IRAs.)\r\n\r\nKeep in mind that withholding isn\u2019t a tax, but rather the IRS\u2019s way of ensuring you ultimately pay whatever ordinary income tax you end up owing on withdrawals.\r\nThe CARES act gives you extraordinary flexibility to manage the resulting tax liability. You can choose to spread the taxes owed over three years, or pay it all in 2020 if your income (and thus your tax rate) is much lower this year.\r\n\r\nAlternatively, the CARES Act gives you up to three years to redeposit the withdrawn money into a retirement account \u2014 normally you\u2019d have only 60 days. If you restore the retirement funds within three years, you won\u2019t owe tax until you take distributions in retirement. You may, however, have to file an amended tax return to get back any tax you paid before redepositing the funds into retirement savings.\r\nThe Bottom Line\r\nGenerally, the 401k has a hard contribution deadline at the end of the year. But plan participants may check with their human resources department or Personal Capital financial advisor on how to make the best decisions for your retirement and to see if you\u2019re permitted to make contributions in the new year\u2014 before tax time.\r\nSuggested Next Steps for You\r\n\r\n \tSign up for Personal Capital\u2019s free financial tools to track your entire portfolio for free, and see your chances for retirement success. On a mobile device? Visit us on the app store!\r\n \tConsider speaking to a financial advisor about your retirement plan.