When can you no longer contribute to a 401k?

This 72-year requirement applies to most retirement accounts, including traditional IRAs, SEP and SIMPLE IRAs, and qualified plans, such as 401k, 403b and 457.In the past, if you were over 70 and a half years old, you would lose the ability to contribute to a traditional IRA. However, under the new law, there are no age restrictions. Nor is there any age restriction for people over 70 years of age to contribute to a 401 (k) plan. If you're 55 but under 59 ½ when you retire, you can also start receiving penalty-free distributions from your 401 (k).

However, this only applies to the current employer, and you'll have to wait until age 59 and a half to access penalty-free distributions from your former employers. You get two tax breaks when you save on a 401 (k) plan. First, the money you contribute is tax-deductible, meaning that what you contribute to a 401 (k) plan this year won't be taxed as income this year. You won't pay taxes on the funds provided until you withdraw them, usually when you retire.

Your savings grow faster because they are tax-deferred. Your 401 (k) plan enjoys compound growth without being modified by the tax collector until you retire and begin withdrawing money.