Can You Contribute to 401k After Retirement?

For many, retirement no longer signifies a complete departure from the workforce. This raises questions about retirement savings, particularly whether it’s possible to continue contributing to a 401k. The ability to contribute is not determined by age or retirement status but is directly linked to current employment and the type of income received.

The Earned Income Prerequisite for Contributions

The foundational rule for 401k contributions is the presence of earned income, which the IRS defines as compensation for services performed. A general guideline is that if income is subject to Social Security and Medicare (FICA) taxes, it qualifies for retirement plan contributions. This includes:

• Wages
• Salaries
• Commissions
• Tips
• Bonuses
• Net earnings from self-employment

This distinction is important because many income streams common for retirees do not qualify as they are considered passive income. This type of income cannot be used for new 401k contributions. Examples include:

• Distributions from pensions
• Annuity payments
• Social Security benefits
• Returns from investments like dividends or capital gains

Therefore, an individual receiving a pension and Social Security, but not actively working, cannot make new 401k contributions. If that same individual takes on a part-time job, the wages from that job would be considered earned income. This would then allow them to contribute to a 401k, subject to plan availability and other regulations.

Contributing to a 401k with a New Employer

Retirees who work for a new company can contribute to that employer’s 401k plan once they meet eligibility requirements. Contributions to a 401k plan from a former employer are not possible after separation from that company.

Once eligible, which may involve a waiting period, the standard contribution rules apply. For 2025, an employee can contribute up to $23,500. Individuals age 50 and over can make additional “catch-up” contributions of $7,500, allowing a total contribution of $31,000 for those aged 50-59 and 64 or older.

A provision from the SECURE 2.0 Act introduces a higher catch-up limit for those aged 60 to 63. For 2025, this group can contribute an additional $11,250 for a total of $34,750, if the employer’s plan has adopted this provision. These limits apply to the individual across all plans. The overall limit, combining employee and employer contributions, is $70,000 for 2025, or higher with catch-up contributions.

Contributions in Special Employment Scenarios

Some individuals opt for a phased retirement, reducing their hours but continuing to work for their long-time employer. As long as they remain an employee receiving W-2 wages, they can continue to contribute to their existing 401k plan.

Another path is starting a business or working as an independent contractor, which allows for a Solo 401k. This plan is for self-employed individuals with no employees other than a spouse. The owner acts as both “employee” and “employer,” allowing for two types of contributions to the same plan.

As the “employee,” the individual can defer up to 100% of compensation up to the annual limit ($23,500 for 2025), plus applicable catch-up contributions. As the “employer,” they can also make a contribution of up to 25% of their net adjusted self-employment earnings. This dual structure is capped at the overall IRS limit.

Interaction with Required Minimum Distributions (RMDs)

While working and contributing to a 401k, older individuals may also face Required Minimum Distributions (RMDs). The RMD age is 73 for those born between 1951 and 1959, and it will rise to 75 for those born in 1960 or later. A provision known as the “still working” exception can provide a delay.

This exception allows an individual to postpone RMDs from the 401k plan of their current employer, as long as they are still working for that company and do not own more than 5% of the business. The exception is plan-specific and only applies to the 401k of the company where the person is actively employed. Part-time work is sufficient.

This exception does not apply to IRAs or to 401k plans held with former employers. An individual must still take annual RMDs from those accounts while working and contributing to a new 401k. For example, a 75-year-old with an IRA and a 401k from a previous job who starts a new part-time job can delay RMDs only from the new plan, but must take them from the IRA and the old 401k.