401(k) Employee Year-End Checklist

Ella Baker
401k Year-End Checklist
Reading time 3 Mins
Published on Nov 17

Retirement is both an exciting and terrifying prospect for most. The thought of being free from the constraints of regular work is enticing, while planning and paying for your post-work life can seem overwhelming. An employer-sponsored 401(k) plan can offer an ideal retirement savings vehicle for employees. With the end of the year nearing and tax season right around the corner, now is the time to start thinking about how you can maximize the benefit you receive from your retirement account. Help your employees make the most of their 401(k) plan with this year-end checklist.

Maximize your tax breaks

With a generous maximum annual contribution of $20,500 (for tax year 2022), an employee’s 401(k) offers the perfect opportunity to fund their retirement. Ensuring that you max out your contributions not only puts you on track to meet your retirement goals, it can also help you come tax time.

Since your 401(k) contributions are taken out pre-tax, you can reduce your tax liability by maximizing the amount you put into your account each year. If you make $100,000 per year and make the maximum annual contribution of $20,500, you can effectively reduce your tax liability to $79,500. To learn more about planning for retirement, check out ABCs of the Retirement Plan.

Check your investments

Your 401(k) isn’t just a savings account. The money in your 401(k) is invested to generate a return to fund your retirement future. Making sure that your investments are working for you is the best way to help you get the best return possible.

At the end of each year, you should check up on your investment’s performance and make sure that you’re seeing the returns you expect from your current investment portfolio. If you’re not happy with what you see, you may need to consider shifting your investments to more aggressive or conservative funds, depending on where you are.

Plan for the future

Contributions are the amount that the employee deposits into their retirement account. The IRS places maximum contribution limits on 401(k) plans, with annual changes to track inflation. For 2022, the maximum contribution for employees is $20,500 for employees under 50. For 2023, the contribution limit is increasing to $22,500.

If you’re over 50, you can make an additional catch-up contribution of $6,500 ($7,500 in 2023).

Increasing your 401(k) contribution to get closer to or meet the maximum limit can place you in a better position when it comes time to retire. Even if you can’t meet the maximum contribution, you can still benefit by depositing more money into your 401(k) account whenever possible.

Update your beneficiaries

Finally, the fourth quarter is the ideal time to review all of your accounts, including your 401(k), with your beneficiaries to make sure that all information is current and accurate. If you’ve recently gotten married, divorced, had a child, or experienced a death in your immediate family, you may need to add or remove beneficiaries from your accounts.

Plan administration you can trust

Selecting the right retirement plan for your company and employees can be a daunting task for many small and medium-sized employers – that’s where we come in. Sheakley Retirement provides individual retirement account support for employers. It starts with a consultative meeting to determine the plan design that best meets the needs of the business and its employees. Then we’ll manage the retirement planning services, ensuring a simple, efficient and successful 401(k) profit-sharing plan or other retirement program.

Learn more about Sheakley Retirement and contact us for your free consultation today.

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