Table of Contents

401(k) and IRA Contributions: You Can Do Both

By

澳洲幸运5开奖号码历史查询:Andrew Bloomenthal

Updated August 15, 2024

Reviewed by Eric Estevez

Fact checked by

David Rubin

Part of the Series

401(k) Plans: The Complete Guide

401(k) Plans: What Are They, How They Work

What Is It?

401(k)s at Work

When Changing Jobs

Tips and Tricks

A retired couple celebrate at the kitchen table after reviewing the balance of their retirement annuity account.

Do you have a 401(k) plan through work? You can still contribute to a Roth IRA (individual retirement account) and/or a 澳洲幸运5开奖号码历史查询:traditional IRA as long as you meet the IRA's 澳洲幸运5开奖号码历史查询:eligibility requirements.

You might not be able to take a tax deduction for your traditional IRA contributions if you also have a 401(k), but that will not affect the amount you are allowed to contribute. In 2023, you can contribute up to $6,500, or $7,500 with a 澳洲幸运5开奖号码历史查询:catch-up contribution for those 50 and over. In 2024, those amounts are $7,000 and $8,000, respectively.

It usually makes sense to contribute enough to your 401(k) account to get the maximum 澳洲幸运5开奖号码历史查询:matching contribution from your employer. But adding an IRA to your retirement mix after that can provide you with more investment options and possibly lower fees than your 401(k) charges. A Roth IRA will also give you a source of tax-free income in retirement, provided you've had the account for at least five years. Here are the rules you need to know.

Key Takeaways

Having a 401(k) account at work doesn't affect your eligibility to make IRA contributions.
Your income determines whether your traditional IRA contributions are deductible, and it also determines the amount of money you can contribute to a Roth IRA.
Spousal IRAs allow you to contribute when your spouse works even if you don't have any earned income yourself.
The Internal Revenue Service imposes a 6% excise tax if you make excess contributions to your IRA.

IRA Eligibility and Contribution Limits

The contribution limits for both traditional and Roth IRAs are $7,000 per year for 2024, plus a $1,000 澳洲幸运5开奖号码历史查询:catch-up contribution for those 50 or older.

You can split your contributions between different types of IRAs, for example by having both a traditional and a Roth IRA. But your total contribution cannot be higher than the limit for that year. Traditional and Roth IRAs a𝄹lso have diffe꧙rent rules regarding your contributions.

Traditional IRAs

Contributions to a traditional IRA are often tax-deductible. But if you are covered by a 401(k) or any other employer-sponsored plan, your 澳洲幸运5开奖号码ꩲ历史查询:modified adjusted gross incom💙e (MAGI) w🥀ill d🦹etermine how much of your contribution you can deduct, if any.

The following tables break it down:

Deductibility of IRA Contributions If You Also Have an Employer Plan for 2023
Tax-Filing Status	Income to Deduct Full Contribution	Income for Partial Deduction	Above This Income, No Deduction	Contribution Limit
Single	Less than $73,000	$73,000 to $83,000	More than $83,000	$6,500 + $1,000 more if you're 50+
Married, with your own 401(k)	Less than $116,000	$116,000 to $136,000	More than $136,000	$6,500 each + $1,000 more if you're 50+
Married, spouse has a 401(k)	Less than $218,000	$218,000 to $228,000	More than $228,000	$6,500 each + $1,000 more if you're 50+
Married with own 401(k), filing own return	$0	$0 to $10,000	More than $10,000	$6,500 + $1,000 more if you're 50+

Deductibility of IRA Contributions If You Also Have an Employer Plan for 2024
Tax-Filing Status	Income to Deduct Full Contribution	Income for Partial Deduction	Above This Income, No Deduction	Contribution Limit
Single	Less than $77,000	$77,000 to $87,000	More than $87,000	$7,000 + $1,000 more if you're 50+
Married, with your own 401(k)	Less than $123,000	$123,000 to $143,000	More than $143,000	$7,000 each + $1,000 more if you're 50+
Married, spouse has a 401(k)	Less than $230,000	$230,000 to $240,000	More than $240,000	$7,000 each + $1,000 more if you're 50+
Married with own 401(k), filing own return	$0	$0 to $10,000	More than $10,000	$7,000 + $1,000 more if you're 50+

澳洲幸运5开奖号码历史查询:IRS Publication 590-A explains how to calculate your deductible contribution if either you or your spouse is covered by a 401(k) plan.

Even if you don't qualify for a deductible contribution, you can still benefit from the tax-deferred investment growth in an IRA by making a nondeductible contribution. If you do that, you will need to file IRS 澳洲幸运5开奖号码历史查询:Form 8606 with your tax return for the year.

Roth IRAs

Roth IRAs provide no upfront tax benefit, and it doesn't matter whether you have an employer plan. How much you can contribute, or whether you can contribute at all, is based on your tax filing status and your income for the year.

This table shows the current income thresholds:

Roth IRA Contributions for 2023
Tax-Filing Status	Income for Full Contribution	Income for Partial Contribution	No Contribution Allowed	Contribution Limit
Single	Less than $138,000	$138,000 to $153,000	More than $153,000	$6,500 + $1,000 more if you're 50+
Married, filing jointly	Less than $218,000	$218,000 to $228,000	More than $228,000	$6,500 + $1,000 more if you're 50+
Married, filing separately	$0	$0 to $10,000	More than $10,000	$6,500 + $1,000 more if you're 50+

Roth IRA Contributions for 2024
Tax-Filing Status	Income for Full Contribution	Income for Partial Contribution	No Contribution Allowed	Contribution Limit
Single	Less than $146,000	$146,000 to $161,000	More than $161,000	$7,000 + $1,000 more if you're 50+
Married, filing jointly	Less than $230,000	$230,000 to $240,000	More than $240,000	$7,000 each + $1,000 more if you're 50+
Married, filing separately	$0	$0 to $10,000	More than $10,000	$7,000 + $1,000 more if you're 50+

Spousal IRAs

You must have 澳洲幸运5开奖号码历史查询:earned income to contribute to an IRA. However, there's an exception for married couples where only one spouse works outside the home. That's a 澳洲幸运5开奖号码历史查询:spousal IRA. It allows the employed spouse to contribute to an IRA of a nonworking spouse and as much as double the family's retirement savings. You can open a spousal IRA as either a traditional or a Roth account.

Important

The total of your combined contributions in a spousal IRA can’t exceed the taxable compensation reported on a joint tax return.

What If You Contribute Too Much to an IRA?

If you discover that you contributed more to your IRA than you're allowed, you'll want to withdraw the amount of your overcontribution—and fast. Failure to do so in a timely way could leave you liable for a 6% excise tax every year on the amount that exceeds the limit.

The penalty is waived if you withdraw the money before you file your taxes for the year in which the contribution was made. You also need to 澳洲幸运5开奖号码历史查询:calculate what your excess contrib🌟⛦utions eaꦰrned while they were in the IR🐻A and withdraw that amount from the account, as well.

The investment gain must also be included in your 澳洲幸运5开奖号码历史查询:gross income for the year and taxed accordingly. What's more, if you are under 59½, you'll owe a 10% early withdrawal penalty on that amount.

What Is an IRA?

An IRA, or individual retirement account, allows investors to save for the future. It is a 澳洲幸运5开奖号码历史查询:tax-advantaged account. There are a handful of options, including traditional, Roth, 澳洲幸运5开奖号码历史查询:SEP🐈 (Simplified 🍬Employee Pension) IRAs, and SIMPLE (Savings Incen🙈tive Match Plan f♔or Employees) IRAs.

What Is a Roth IRA?

A Roth IRA is a type of individual retirement account. It is funded with after-tax money, which means that you don't get an upfront tax deduction (like you would with a traditional IRA). In retirement, though, as long as you've had the account for over five years and you're 59 ½ or older, any withdrawals you make are penalty- and tax-free.

The Bottom Line

You can contribute to both a 401(k) and an IRA, as long as you keep your contributions to certain limits. 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. The exception is the Roth IRA, which is dependent on your income and tax filing status. The deductibility of contributions to a traditional 401(k) also depends on your income and tax filing status.

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