When can contributions to a 401(k) plan be made?

When can contributions to a 401(k) plan be made?

• A. Only at the end of the fiscal year
• B. Throughout the calendar year while employed
• C. Only during tax season
• D. After leaving the job

Answer: (B)

Contributions to a 401(k) plan can be made throughout the calendar year while an individual is employed. This flexibility allows employees to set aside a portion of their earnings from each paycheck into their retirement savings account, adhering to the contribution limits set by the IRS. Regular contributions can be adjusted by the employee, increasing or decreasing their deferral percentage as needed. This option highlights the benefit of consistent saving and investment growth over time, which is essential for building a substantial retirement fund. The ongoing nature of these contributions promotes disciplined savings habits, making it easier for employees to plan for the future without waiting for specific time frames.

Contributions to a 401(k) plan can be made throughout the calendar year while an individual is employed. This flexibility allows employees to set aside a portion of their earnings from each paycheck into their retirement savings account, adhering to the contribution limits set by the IRS. Regular contributions can be adjusted by the employee, increasing or decreasing their deferral percentage as needed.

This option highlights the benefit of consistent saving and investment growth over time, which is essential for building a substantial retirement fund. The ongoing nature of these contributions promotes disciplined savings habits, making it easier for employees to plan for the future without waiting for specific time frames.