How to Adjust Your 401k Contribution Rate

A 401(k) retirement savings plan is a tool for building financial security. It allows employees to contribute a portion of their salary to an investment account, often with employer support. Adjusting contributions is a key aspect of personal financial planning. This flexibility helps individuals align their savings strategy with their current income, future goals, and tax considerations.

Key Information for Adjusting Contributions

Understanding your current contribution rate is the first step in managing your 401(k). This information can be found on your paystubs or within your 401(k) plan statements, available through your plan administrator’s online portal.

Annual contribution limits are set by the IRS and change annually. For 2025, employees can contribute up to $23,500. Those age 50 or older can make an additional “catch-up” contribution of $7,500, totaling $31,000. A specific provision under the SECURE 2.0 Act allows individuals aged 60 to 63 to contribute an even higher catch-up amount of $11,250 in 2025, if their plan permits. These limits apply across all 401(k) accounts an individual may have, even if contributing to multiple plans from different employers.

Employer matching contributions boost retirement savings. Many employers match a portion of your contributions, often dollar-for-dollar up to a certain percentage of your salary, or a partial match. For instance, an employer might match 100% of the first 3% of your salary you contribute, then 50% of the next 2%. These matching contributions are essentially “free money” and are subject to vesting schedules, meaning you must work for the employer for a certain period before the matched funds become fully yours. Contribute at least enough to receive the full employer match.

You have the option of making pre-tax (traditional) or Roth contributions. With pre-tax contributions, the money is deducted from your paycheck before taxes are applied, which reduces your current taxable income. These contributions and their earnings grow tax-deferred, and you pay taxes on withdrawals in retirement.

Roth 401(k) contributions are made with after-tax dollars, without an immediate tax deduction. However, qualified withdrawals in retirement, including earnings, are entirely tax-free. Your employer’s contributions, even if you elect Roth, typically go into a traditional pre-tax account. The choice between pre-tax and Roth depends on your current and anticipated future tax bracket; if you expect to be in a higher tax bracket in retirement, Roth may be more beneficial, while a pre-tax option might be preferred if you expect a lower tax bracket in retirement.

Most 401(k) plans allow you to adjust your contribution rate at any time, although some employers or plan administrators might impose specific windows or limits on change frequency. Information regarding adjustment frequency and plan details can be found in your Summary Plan Description (SPD). The SPD outlines eligibility, contribution rules, vesting schedules, and account management. You can access your SPD and other plan information through your plan administrator’s website or by contacting your human resources department.

Making the Contribution Adjustment

Adjusting your 401(k) contribution rate begins by accessing your plan administrator’s online portal. Navigate to the provider’s website and log in with your credentials. If it is your first time accessing the portal, you might need to complete a brief enrollment or registration process to verify your account.

Once logged in, locate the section dedicated to managing your contributions. This area may be labeled “Contributions,” “Payroll Deductions,” “Elections,” or “Manage Investments.”

Within the contribution section, you will be prompted to enter your desired new percentage or dollar amount. If your plan offers both pre-tax and Roth 401(k) options, you can specify how your contributions should be allocated between them. As you input the new deferral amounts, the system may provide an estimated calculation of your contributions per pay period and for the entire year, based on your current salary.

After entering the new contribution details, it is important to review all changes for accuracy before finalizing. Most online portals will have a “Save,” “Submit,” or “Confirm” button to complete the adjustment. Following submission, expect a confirmation, such as an on-screen message, email, or mailed statement.

The effective date of your new contribution rate aligns with your employer’s next payroll cycle. If you make a change close to payroll processing, the new rate might take effect in the subsequent run. It is a good practice to check your paystubs for the next one or two cycles to verify that the new contribution amount has been implemented. While online portals are the most common method, some employers may still require paper forms or direct contact with human resources.