For 2024, you can contribute up to $23,000 to a 401(k) unless you're 50 or older, in which case you can contribute an additional $7,500, or $30,500 total. You can also contribute up to $7,000 to an IRA unless you're 50 or older—in that case, you can contribute an additional $1,000, or $8,000 total.
It's a question that comes up frequently when it comes to retirement planning: Can I contribute to a 401(k) and an IRA? The simple answer is yes, you can. However, there are some caveats when it comes to deducting your IRA contributions if you participate in both types of plans.
If you're serious about saving for a retirement, it's definitely recommended to make use of both the IRA and 401k. Maxing both if financially possible. You don't have to max if it's not financially feasible, and waiting to do your research and understand what we're talking about is certainly smart.
Yes. You can contribute to a 401(k) and an IRA in the same year. Your income may limit your eligibility to deduct your traditional IRA contribution on your taxes, but you can still make a non-deductible contribution.
Advantages of Having a 401(k) and an IRA
Though you may not be able to claim a tax deduction on all your contributions, you can max out each type of account in the same tax year. Plus, the IRS permits those who are at least 50 years old to make additional “catch-up” contributions into each account.
If you're at least age 59½ and your Roth IRA has been open for at least five years, you can withdraw money tax- and penalty-free. See Roth IRA withdrawal rules.
The 401(k) plans are also better for high earners because they don't restrict the tax benefits. An IRA is better if your top priority is investment selection, and you don't want your retirement plan tied to an employer.
Income limits for a Roth IRA set the maximum earnings individuals or couples can have to qualify for contributions within a specific year. For 2025, single filers must have a modified adjusted gross income (MAGI) of less than $150,000, and joint filers less than $236,000, to make a full contribution.
Based on median incomes and the 10x rule, most people will need about $740,000 to finance a secure retirement. So in theory, a $750,000 Roth IRA and $1,800 in Social Security benefits will be enough for many individuals to retire.
Depending on their plan's investment menu, employees might be better off maximizing the match from their employer and then funneling extra retirement dollars into a Roth IRA. That way they can take advantage of better investment options if the fund lineup is too limited in the employer's plan.
The Bottom Line. If you leave your job, your 401(k) will stay where it is until you decide what you want to do with it. You have several choices including leaving it where it is, rolling it over to another retirement account, or cashing it out.
1. Emergency Fund. Your first savings dollars should go into building an emergency fund. You should have six to twelve months' worth of living expenses set aside in a safe and liquid account such as a bank savings account or a high-yielding money market account (currently yielding between 4% and 6%).
You can withdraw the money, recharacterize the excess contribution into a traditional IRA, or apply your excess contribution to next year's Roth. You'll face a 6% tax penalty every year until you remedy the situation.
If you have a Roth 401(k), you cannot contribute more than what you earn at the company that holds your plan. With most retirement accounts, you can't access the money you contribute or any investment earnings before retirement age without incurring a 10% early withdrawal penalty, plus any applicable income taxes.
For 2022, 2021, 2020 and 2019, the total contributions you make each year to all of your traditional IRAs and Roth IRAs can't be more than: $6,000 ($7,000 if you're age 50 or older), or. If less, your taxable compensation for the year.
Roth IRA contribution limits 2025
In 2025, individuals filing as single must make less than $150,000 to contribute the full amount of $7,000. Those married filing jointly must make less than $236,000. Above these limits, the contribution limit is decreased until it is phased out completely.
For 2025, the most you can contribute to a Roth 401(k), a traditional 401(k), or a combination of the two is $23,500. Those 50 and older could contribute an additional $7,500 in 2023 and 2024, and they can also do so in 2025. Those 60 to 63 can contribute an additional $11,250 in 2025 in place of the $7,500.
You can contribute to a Roth IRA (a type of individual retirement plan) and a 401(k) (a workplace retirement plan) at the same time. Anyone eligible can contribute to an employer's 401(k), but income limits apply to Roth IRAs.
Deferring Social Security payments, rolling over old 401(k)s, setting up IRAs to avoid the mandatory 20% federal income tax, and keeping your capital gains taxes low are among the best strategies for reducing taxes on your 401(k) withdrawal.
The annual contribution limit for employees who participate in 401(k), 403(b), governmental 457 plans, and the federal government's Thrift Savings Plan is increased to $23,500, up from $23,000. The limit on annual contributions to an IRA remains $7,000.
You can take distributions from your IRA (including your SEP-IRA or SIMPLE-IRA) at any time. There is no need to show a hardship to take a distribution. However, your distribution will be includible in your taxable income and it may be subject to a 10% additional tax if you're under age 59 1/2.