As the end of year approaches, make sure you’re doing all you can to maximize your 401(k) account value. Boosting your 401(k) contributions could significantly decrease your 2020 tax bill. A 50-year-old participant in the 24% tax bracket who maxes out their 401(k) would reduce their tax bill by $6,240. Even a $1,000 contribution would save them $240 in taxes.
Deposits to your 401(k) plan are typically due by the end of the calendar year. The contribution limit for 2020 is $19,500, unless you are over the age of 50, in which case you can contribute an additional $6,500, for a total of $26,000.