This Retirement Window Will Soon Slam Shut

Leveraging an employer-sponsored retirement such as a 401(k), 403(b), or Thrift Savings Plan throughout your career can propel you to a financially comfortable retirement. If there's a weak spot in these plans, though, it's this: They have limits in terms of how much you can contribute and when. For 2016, the window to contribute slams shut on Dec. 31, the last day of the year.

Image source: Getty Images

Once Dec. 31 comes and goes, you can no longer contribute to your 401(k), 403(b), or Thrift Savings plan for 2016. As long as you're still working for an employer that offers such plans and otherwise qualify to contribute, you will be able to make 2017 contributions as early as Jan. 1, 2017. Since the amount you can contribute is based on the year you contribute it, though, once the window to put money away for 2016 passes, it's gone for good.

How much can you contribute in 2016?

If you're under age 50, you can generally contribute up to $18,000 in 2016. If you're age 50 or up, the typical limit is $24,000, which includes a $6,000 catch-up contribution above and beyond that base. You can't contribute more than you earn, and your employer may very well limit how much of each paycheck you can contribute. In addition, if you're considered a "highly compensated employee," you will likely have a lower limit set on your contribution as well.

That combination of limits essentially means that if you haven't started contributing to your 401(k) for 2016 by now, you will be unlikely to completely contribute the maximum by the end of this year. What you can do, however, is get started and set yourself up on a path of automatic contributions starting in 2016 that can continue throughout 2017 and beyond.

Contribution limits for 2017 are the same as in 2016, so you can start up a contribution plan today with an eye toward keeping it steady into the future, and you wouldn't have to change it next year. The table below shows what that maximum annual contribution amount works out to on a per-paycheck basis, depending on how often you get paid and your age:

Pay Cycle

Under Age 50

Age 50+




Every Two Weeks



Twice a Month






You don't have to contribute the maximum in order to contribute to your 401(k), 403(b), or Thrift Savings Plan, and anything you are able to contribute can compound for your future. So contribute what you can up to those limits, and let your money start working for your future.

How can you get started?

Your 401(k), 403(b), or Thrift Savings Plan is an employer-sponsored retirement plan, so your best resource for getting started can be found at your work. Great places to start looking include your employer's internal employee network, your HR manager, or your payroll administrator.

Generally speaking, you'll have to fill out a few online forms to get started. Key ones are those that authorize your payroll deduction, direct your contribution among the funds the plan offers, and name your beneficiaries should you pass away. All in all, it will likely take you somewhere around 15 minutes to complete the paperwork, but rest assured that it's a one-time effort. Once you've started contributing, continuing is generally automatic unless you actively stop it or leave employment.

The best time to start is today

Every year, that year's contribution window for employer-sponsored retirement plans closes on Dec. 31, and once it's gone, it's gone. The most valuable asset you have when it comes to building a retirement nest egg that can help you be financially comfortable during your golden years is your time. No matter what you're able to sock away for your future, the sooner you start saving, the longer your money has to work for you and the greater its compounding potential can be.

So get started with your automatic contributions to your 401(k), 403(b), or Thrift Savings Plan account today, beat the 2016 deadline, and get your money working for you. Once you reach retirement, you'll be glad to have that nest egg set aside to help cover your needs.

The $15,834 Social Security bonus most retirees completely overlook If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $15,834 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after.Simply click here to discover how to learn more about these strategies..

Chuck Saletta has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.