Carrie Schwab Pomerantz
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Dear Carrie: I am over 73 years old. Can I still contribute to my 401(k) and, if so, how much per year? --A Reader

Dear Reader: You can indeed! As long as you're working and your employer offers a 401(k) plan, you're eligible to contribute to it. How much you can contribute depends on your income and the specifics of your company's plan, but theoretically, you could sock away up to $22,000 each year in your 401(k). Workers of any age can contribute up to $16,500, and because you're over 50, you're eligible to contribute an additional $5,500 as a "catch-up" contribution.

Saving is generally never a bad thing, but saving through a 401(k) plan or other tax-advantaged account is especially rewarding. You're saving with pretax dollars. Earnings grow tax-free. And if your company matches some or all of your savings, you really get an extra boost.


One of my most familiar refrains is the importance of saving for retirement--and that's true for virtually everyone, especially people who are planning on leaving the workforce. But one way to reduce the drain on your savings is to continue to work.

--Current income means you reduce or postpone dipping into capital for current living expenses, so your retirement savings can potentially continue to grow.

--If you're still working, you can delay taking Social Security benefits until you've reached the IRS-defined "full retirement age"-- the longer you wait, the greater your benefit, up to age 70 (check for details). In your case, you're already eligible for your maximum Social Security payment, and I'm assuming you're receiving it.

In fact, working becomes much more attractive for those past the full retirement age; if you take an early, reduced benefit and continue to work or go back to work part time, you'll lose part of your retirement benefit. But after you reach the full retirement age, you can earn as much as you like with no penalty.

--If you're lucky enough to work for a company with a pension plan, working longer may result in a higher benefit.

--As long as you're working, you generally don't need to start taking the IRS-mandated "Required Minimum Distributions" from your 401(k) plan, which normally must begin in the year after the year that you turn 70-and-a-half, unless you have an ownership interest of more than 5 percent in the company, in which case distributions are required.

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Carrie Schwab Pomerantz

Carrie Schwab Pomerantz is a Motley Fool contributor.

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