Miss the December 31 cutoff and you can't make up the difference. The IRS doesn't let you carry over unused 401(k) contribution limits. One under-contributed year can cost six figures in lost retirement savings.
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A single year of under-contributing feels minor in the moment. But retirement accounts grow through compounding, and every dollar you don't contribute in year one never generates returns in years two through thirty.
| Amount missed | After 10 years | After 20 years | After 30 years |
|---|---|---|---|
| $5,000 | $9,385 | $17,622 | $33,079 |
| $12,500 | $23,463 | $44,054 | $82,698 |
| $24,500 | $45,987 | $86,346 | $162,088 |
Based on 6.5% average annual return, compounded annually
These numbers assume a single missed year. Most people who under-contribute once do it again. The gap compounds.
About 41% of 401(k) participants don't contribute enough to capture the full employer match (Financial Engines/Alight, 2023). That's free money, forfeited because the deferral rate was set too low.
Most plans match 50% of contributions up to 6% of salary. On a $75,000 salary, that's $2,250 per year in free employer contributions. Skip that for 20 years at 6.5% growth, and you've lost roughly $88,000 in retirement savings you were already entitled to.
A 401(k) deadline reminder a few weeks before year-end gives you time to verify your deferral rate and capture the full match before the last paycheck clears.
The 401(k) deadline is less forgiving because it requires payroll changes that take effect over multiple paychecks. You can't fix it in a single afternoon the way you can with an IRA.
No. The IRS does not allow you to carry over unused 401(k) contribution limits from prior years. If you contributed $15,000 in 2025 instead of the $23,500 limit, that $8,500 gap is gone permanently. The only exception is catch-up contributions for people 50 and older, but those are an additional allowance, not a make-up mechanism.
One missed year of maxing out ($24,500 in 2026) could cost over $117,000 in lost growth over 25 years, assuming a 6.5% average return. If your employer also matches and you miss that, add the match amount and its compounding on top.
Every dollar below the limit is a dollar that never compounds tax-advantaged. Contributing $12,000 instead of $24,500 means $12,500 in lost deferral. Over 20 years at 6.5%, that single-year gap grows to roughly $47,000 in lost retirement savings.
It can. Most employer matches are calculated per paycheck. If your deferral rate is too low to trigger the full match in each pay period, you leave match money behind. Some plans do a "true-up" at year-end, but many do not. Check with your HR department.
Yes. Employee 401(k) salary deferrals must happen by December 31 through payroll. IRA contributions can be made as a lump sum until April 15 of the following year. The 401(k) deadline is earlier and harder to recover from because it requires payroll changes, not a bank transfer.
Set a free reminder before December 31. Check your deferral rate while there's still time to adjust it.
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