Contributing to both an IRA and a 401(k) can supercharge your retirement savings—but only if you understand the rules. Here’s how to make the most of both.
Understanding the Basics
A 401(k) is a workplace retirement plan set up by your employer. It usually includes limited investment options and sometimes offers matching contributions. An IRA, on the other hand, is an individual retirement account that offers more investment flexibility.
Yes, you can contribute to both—but there are income-based limitations and tax considerations you need to be aware of.
Traditional IRA Deduction Limits
If you're covered by a workplace plan like a 401(k), the amount of your IRA contribution that you can deduct depends on your adjusted gross income (AGI) and tax filing status.
2024 Deduction Limits:
Single/Head of Household: Full deduction up to $77,000; partial up to $87,000.
Married Filing Jointly: Full deduction up to $123,000; partial up to $143,000.
Married Filing Separately: Partial deduction up to $10,000.
2025 Deduction Limits:
Single/Head of Household: Full deduction up to $79,000; partial up to $89,000.
Married Filing Jointly: Full deduction up to $126,000; partial up to $146,000.
Married Filing Separately: Partial deduction up to $10,000.
Even if you exceed these limits, you can still make nondeductible contributions to a traditional IRA.
Roth IRA Income Limits
Roth IRAs don’t offer tax deductions up front, but they allow for tax-free withdrawals in retirement. Income limits still apply.
2024 Roth IRA Limits:
Single/Head of Household: Full contribution up to $146,000; phaseout up to $161,000.
Married Filing Jointly: Full contribution up to $230,000; phaseout up to $240,000.
2025 Roth IRA Limits:
Single/Head of Household: Full contribution up to $150,000; phaseout up to $165,000.
Married Filing Jointly: Full contribution up to $236,000; phaseout up to $246,000.
Note: These are contribution limits only. You can always convert a traditional IRA to a Roth IRA regardless of income—this is known as a backdoor Roth strategy.
Contribution Limits for 2024 and 2025
401(k): $23,000 in 2024, $23,500 in 2025.
Catch-up for age 50+: $7,500
Special catch-up for age 60–63 (2025 only): $11,250
IRA (Traditional or Roth): $7,000 in both 2024 and 2025.
Catch-up for age 50+: $1,000
Total potential retirement savings across accounts is significant—especially if you're maximizing both plans and employer contributions.
Why Use Both an IRA and a 401(k)?
Using both accounts allows for:
Diversified tax treatment (tax-deferred vs. tax-free)
Greater investment flexibility
More control over income in retirement
401(k)s are limited in their investment menus and subject to employer plan rules. IRAs, especially Roth IRAs, give you greater control and can be valuable for managing tax liabilities in retirement.
The Bottom Line
If you’re eligible, contributing to both a 401(k) and an IRA can help you build a more flexible and tax-efficient retirement portfolio. Be sure to understand the rules, maximize your contributions where possible, and consider speaking with a financial advisor to create a personalized strategy.