401k terminated mid-year -- can I put money in an IRA?

[Anonymous]

Or company 401k was terminated mid year, and is not fully funded.

Would I be able to contribute to a an IRA, even though I have had some contributions into the 401k?

[Anonymous]

IRA contributions are $5,500 if you're under 50. It's completely separate from your 401k. I max out both.

[Anonymous]

So is there anything I can do to maximize my tax deferrals if I no longer have a 401k, but partially funded one earlier in the year?

Say, I would normally qualify to put $18k for the year.
But if I only put in $5k before it got shut off... is there any way I can do tax deferral for the additional $13k I would have. Or not?

I know there is a SEP IRA if you are self-employed... but I am not, so I don't think that would apply.

[Anonymous]

I dealt with a 401k plan termination at work too. Of course, consult a professional and your plan administrators/Trustee to get the best advice, as they will owe you a fiduciary duty on your rights as a plan participant. But fwiw, in my case, my accountant and our company's tax and benefits counsel (plus my own research) confirmed that the tax deferral is driven off the operation of the plan. So if the 401k was terminated mid-year, then whatever was funded at that point counts and would could have been funded but was not is left on the table. If there is something specific about your plan termination, then maybe you can max out as part of plan termination. But your plan administrator/trustee will have to advise you on that.

[Anonymous]

Ive never heard of this. Why would a company do this?

[Anonymous]

Anonymous wrote:Ive never heard of this. Why would a company do this?

401k's are not free for an employer. It's probably a very small company that has downsized and can no longer afford whatever match they offered.