A partner can usually still contribute to a 401(k) plan, however the tax treatment of the contributions is different. For example, the partnership's matching contribution is considered a guaranteed payment, and is treated like self-employment income rather than a salary, which leads to different taxes.
Can a Partner Contribute to a 401(k) Plan? FAQs
A 401(k) plan is a retirement plan offered by an employer designed to help employees save for retirement.
A partner can usually still contribute to a 401(k) plan, however the tax treatment of the contributions is different. For example, matching contributions is treated like self-employment income rather than a salary.
Yes, as long as the individual is a working spouse or domestic partner of the primary account holder, they can make contributions to their own 401(k) plan or any other employer-sponsored retirement savings account.
No, it does not matter what your partner’s income is; only the primary account holder’s salary will be taken into consideration when determining contribution limits and eligibility for tax benefits.
Yes, there is an annual maximum that your partner can contribute to your joint 401(k). In 2021, this amount is capped at $14,500 or 100% of their income (whichever is less).
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.
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