If I make a lump-sum contribution to my 401K, can I deduct the amount from my taxable income (2007 return)?

Question

I basically have not done my pre-tax 401k contributions this year(out of my paycheck) and now want to do a lump sum contirbution(before the end of the year) ... can I still get the tax benifits ??? THANKS !!!

Answer 1

If your employer's plan allows you to make lump-sum contributions, yes you could deduct it unless they show it on your W-2 as already deducted. But most plans just work on payroll deductions, not lump sum contributions. Ask your HR department or your employer.

Answer 2

Sorry, but you can't make lump-sum contributions to a 401(k). With a 401(k) you can ONLY make contributions via salary offset. The only exception to that is if you are rolling over a 401(k) or other qualified retirement plan from a previous employer IF your current plan allows rollover contributions; not all of them do.

You're probably in the open season for changing your elections for next year right now. You can start contributing via salary offset as of Jan 1, 2008 if you make the election by the open season deadline. And if your employer makes any matching contributions you'd be a fool to not take advantage of that FREE money.

Answer 3

Ask your payroll/benefits department if they can accept a salary reduction agreement for 2007. If you have a paycheck due in 2007 you may be able to reduce your salary up to the amount of your paycheck. You cannot reduce your salary below zero.

So although you may not be able to maximize your contribution you might be able to make one relatively large contribution from your last paycheck(s).

Then in January you have to re-do the salary reduction agreement, to cancel or modify it.

Answer 4

99.9% of the time only through payroll deduction can you contribute to your 401k. So most likely you will not.

Answer 5

Only if your employer will allow it. 401(k) contributions generally do not have the flexibility that IRAs do.