How To Make Changes to Your 401(k) Contributions

Whether you just set up your 401(k) plan or you established one long ago, you may want to change the amount of your contributions — or even how they’re invested. Fortunately, it’s usually a fairly straightforward process to change 401(k) contributions.

How often can you change your 401(k) contributions? You may be able to make changes at any time, depending on your plan. After all, the point of a 401(k) plan is to help you save for your retirement. So it’s important to keep an eye on your account and your investments within the account, to make sure that you’re saving and investing according to your goals.

Learn how to maximize your 401(k), change your 401(k) contributions, and save for retirement.

Purpose of a 401(k)

A 401(k) plan is a retirement account that a company may offer to its employees. In some cases, enrollment in the employer’s 401(k) is automatic; in other cases it’s not. Be sure to check, so that you can take advantage of this savings opportunity.

Employees may contribute a portion of their paycheck to their 401(k) account, and employers might also contribute to each employee’s account (again, depending on the plan).

The employer’s portion is called the company’s “match” or matching funds. Typically, an employer might match up to a certain percentage of what the employee saves. One common matching plan is when a company matches 50 cents for every dollar saved, up to 6% of the employee’s total contributions. Terms vary, so it’s best to ask your HR representative what the match is.

The money a participant contributes to their 401(k) plan is technically called an “elective salary deferral” because it’s optional, not required, and those deductions are not included in an employee’s taxable income. That’s why 401(k) and similar accounts (like a 403(b) plan and most IRAs) are often called tax-deferred accounts: You don’t pay taxes on the money you’ve saved until you withdraw the money in retirement.

This tax benefit can be significant. Every dollar you save reduces your taxable income, which may result in a lower tax bill in some cases.

Can You Change Your 401(k) Contribution at Any Time?

Many 401(k) plans allow participants to change the amount of their 401(k) contributions at any point. According to Department of Labor guidelines, an employer must allow plan participants to change investments at least quarterly (sometimes more often, if company stock or other high-risk investments are offered by the plan).

These are some of the reasons an individual may want to change 401(k) contribution amounts.

The Ability to Save More

You may have gotten a raise, or experienced a change in your financial circumstances, and wish to increase the percentage of your savings. Contributions to these plans are typically expressed as a percentage of your annual salary. For example, if you earn $75,000 per year, and your contribution rate is 10%, you would save a total of $7,500 per year. If you got a raise to $80,000 and now wish to contribute 12%, you would save a total of $9,600 per year.

To Get the Match

As discussed above, some 401(k) plans offer a savings match from the employer. In most cases, the match is a set percentage of the employee’s contribution. If you started your 401(k) at a point when you couldn’t get the full match, you may want to increase your contributions to get the match now.

Rebalancing Your Asset Allocation

If an individual has held the account for a while, say more than a year, the original allocation of investments — i.e. the balance between equities, cash, and fixed income investments — may have shifted. Restoring the original balance of investments may be a priority, if the person’s strategy and risk tolerance haven’t changed.

Changing Your Asset Allocation

An investor might also want to shift the asset allocation because their financial strategy has changed. Perhaps it’s become more aggressive (i.e. tilting toward stocks) or more conservative (tilting toward cash and fixed income).

Setting Up Automatic Increases

Some plans offer participants the option of automatically increasing their contribution rate every year. Setting up automatic increases allows employees to save more in a 401(k) each year without having to think about it.

Automatic contributions are typically made up to a certain percentage, and not to exceed the maximum 401(k) contribution levels. Here’s a look at the 401(k) contribution limits for 2025 and 2026.

It’s important to be aware that under a new law regarding catch-up contributions that went into effect on January 1, 2026 (as part of SECURE 2.0), individuals aged 50 and older whose FICA wages exceeded $150,000 in 2025 are required to put their 401(k) catch-up contributions into a Roth 401(k) account. With Roth accounts, individuals pay taxes on contributions upfront, but can make qualified withdrawals tax-free in retirement.

How to Change 401(k) Contributions: 3 Steps

Again, the 401(k) plan provider will be able to advise participants on how often they can make changes to their contributions, and what the process will look like. For employees unsure of who the plan provider is, the company’s HR department can point them in the right direction.

In some cases, participants can change their contributions directly through their plan provider’s website. Generally, the process of making changes to a 401(k) looks like this:

Step 1:

The employee contacts their 401(k) provider to discuss how to change contributions for their particular 401(k) plan.

Step 2:

The employee considers how much of their paycheck they want to contribute to their 401(k) moving forward, taking their company’s 401(k) match into consideration, and ideally contributing at least that much. The employee might also change their asset allocation, depending on plan rules.

Step 3:

The participant fills out any forms (online or via paperwork) to confirm their new contribution.

Often, these steps can take just a few minutes, using the plan sponsor’s website.

Why Contribute to a 401(k)? 3 Good Reasons

Contributing to a 401(k) plan is an important way to save for retirement. The funds in a 401(k) are invested in assets such as mutual funds, exchange-traded funds (ETFs), or target date funds — which may offer the potential for growth over time.

Three good reasons to contribute to a 401(k) plan are the opportunity to save automatically via regular payroll deductions; the potentially lower tax bill; and the ability to get additional contributions from your employer match, if it’s offered.

Low-stress Saving

For many people, a 401(k) is an easy way to save for retirement because they can choose how much of their salary to contribute each pay period, and deductions happen automatically. An individual doesn’t have to think about their savings, their contributions are taken directly from each paycheck, and it may help to build their nest egg over time.

Lower Taxable Income

Another benefit is the potential for savings during tax season. Since the contributions an employee makes to their 401(k) plan over the course of the year aren’t included in their taxable income, that can lower their overall taxable income. This, in turn, may result in an individual paying less income tax for that year.

And in the future, when they may be in a lower tax bracket due to retirement, they’ll pay lower taxes when they withdraw the money from their 401(k) account. (Just be aware that withdrawing money from a 401(k) account before retirement age (age 59 ½) may lead to early withdrawal penalties.)

Another perk of enrolling in a 401(k) plan is the notion of “free money” from one’s employer. Some companies match a portion of their employees’ contributions — such as 50 cents to $1 for each dollar that an employee contributes. Typically, an employer might set a maximum matching limit, such as 3% to 6% of the employee’s salary.

This matching contribution is often referred to as free money because the contribution effectively increases an employee’s income without increasing their current tax bill.

It’s worth noting that an employer’s match generally vests over the course of three or four years — meaning that the employer-contributed money will accrue in the account, but an employee won’t be able to keep it if they switch jobs unless they remain with the company for a certain amount of time.

Setting up Recurring Contributions

When it comes to setting up a 401(k) and recurring contributions, the process varies by workplace. Some companies offer automatic enrollment to employees. That means they automatically reduce the employee’s wages by a certain amount and direct that money to a retirement savings account.

Or, an employee can choose to enroll, and to contribute a custom amount. This type of contribution is referred to as an elective deferral.

In companies that don’t offer automatic enrollment as an option, employees will need to work with their HR department and retirement plan provider to get their 401(k) set up.

Participants need to decide how much they want to contribute and typically, to choose their investments. They can also opt to take advantage of autopilot settings, and can roll over a 401(k) from a past job into their new one.

How Much to Save for Retirement

There isn’t a single number you need to retire that will work for everyone. Every person’s situation is unique and their retirement looks different. That said, there are some rules of thumb to consider as you determine how much you need for retirement.

One guideline is the 80% rule that says to save 80% of your pre-retirement income. There’s also the reverse 4% rule that says that you can take your projected annual retirement expenses and divide them by 4% (0.04) to know how much money you’ll need to invest now. Or you may use Fidelity’s targets by age from Fidelity to see if you’re on track to save enough.

Financial professionals generally recommend that employees contribute as much as they can to their employer-sponsored 401(k) plan to take advantage of benefits like lower taxes, matching contributions, and tax deferrals.

And if an individual maxes out their 401(k) contributions, they might consider another tax-advantaged retirement plan, like opening an IRA, to save even more for their future. It’s possible to contribute to both a 401(k) and an IRA at the same time.

Adding Alternative Investments to a 401(k)

Some savers may find themselves interested in pursuing alternative investments when saving for retirement. An alternative investment exists outside of the traditional markets of stocks, bonds, or cash.

Self-directed 401(k)s allow participants to add alternate investments to their 401(k) portfolio. With a self-directed 401(k), the investor chooses a custodian such as a brokerage or investment company and works directly with them to purchase the alternative investments.

The Takeaway

For employees looking to change 401(k) contributions, the process is often as simple as reaching out to your plan provider and confirming that you’re allowed to make a change at this time, and then going ahead with it.

Some companies have rules around when and how often employees can make changes to their contributions. Once you have the go-ahead to make the change, and have considered what works best for your current financial situation and your future goals, it’s easy to make the change.

A company-sponsored 401(k) plan offers many benefits, but once you leave your job, many of those benefits — including the employer-matching program — no longer apply. At that point, you may want to consider doing a rollover of your previous 401(k) to an IRA or to your new employer’s plan.

Prepare for your retirement with an individual retirement account (IRA). It’s easy to get started when you open a traditional or Roth IRA with SoFi. Whether you prefer a hands-on self-directed IRA through SoFi Securities or an automated robo IRA with SoFi Wealth, you can build a portfolio to help support your long-term goals while gaining access to tax-advantaged savings strategies.

FAQ

Should I increase my 401(k) contributions?

While it depends on your specific situation, generally speaking, if you can afford it, it’s typically a good idea to increase your 401(k) contributions to save more for retirement. If your employer offers a matching contribution, you could increase your contributions up to the matching limit to get the full match.

Can I change my 401(k) contributions multiple times in one year?

How many times you can change your contributions in one year depends on your employer’s plan. Some plans allow multiple changes to contributions in one year; others may allow just one change. Check with your plan administrator or HR department.

Can my employer change my 401k contribution without my knowledge?

In most cases, your employer cannot legally change your 401(k) contribution amount without your notification or consent. However, there are exceptions. For example, if your plan uses automatic escalation, your contribution amount will increase by a certain amount each year. You should be informed in advance of any such changes.