How to Add to a 401(k)
A 401(k) plan is a government-established retirement savings plan that lets you invest money earned before taxes are taken out. There are a number of significant tax advantages to opening a 401(k) account, and money can be added by both you and your employer. You will, however, suffer a tax penalty and an early withdrawal penalty if you try and take money out of the account before you retire.
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Instructions
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Ask your payroll department about deducting your 401(k) contribution from your paycheck. Employer-sponsored 401(k) plans must be contributed to through payroll and cannot be added to with your savings or other funds.
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Make catch-up contributions to your 401(k) if you are over 50 years old. Those under 50 are limited to contributing $16,500 per year as of 2010. However, if you are over 50 you are allowed to accelerate your retirement savings by contributing up to $22,000 per year to your 401(k) plan.
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Find out if your company is matching your 401(k) investment. Most companies match a certain percentage of your contribution each pay period.
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Open a 401(k) plan for yourself, through a financial planner or with your bank, if you are a sole proprietor of a business. An independent or solo 401(k) plan is similar to both a traditional 401(k) and an IRA or Keogh plan. While you won't receive the additional contribution an employer would make, you can make pre-tax contributions, saving you money.
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