Can I contribute to individual roth ira and 401k roth ira at the same time ?

Question

I've contributed the maximum allowed for the 401k roth ira ($15500). Can I contribute another ($4500-$5500?) to an individual roth ira account? Or any other individual ira account in the same year?

Answer 1

The short answer is yes, you can still contribute to individual Roth and Traditional IRAs. However, when you are covered by your employers retirement plan there are limits to how much you can contribute. The limite is dependent on your modified adjusted gross income and your age.

See IRS document Publication 590, page 14 for explanation. http://www.irs.gov/pub/irs-pdf/p590.pdf

If you have a spouse who makes less or no income, you may also save money (and reduce your taxes) by opening an IRA for your spouse.

Best wishes.

Answer 2

The Roth 401k is a 401k where you "designate" your contribution as "Roth" meaning it is already taxed, and other considerations I won't list here. It is a type of employer plan.

The same Roth IRA contribution rules apply to a person who participates in a Roth 401k as to any other person. The Roth 401k contributions do not replace or limit the Roth IRA contributions.

In particular, if your income is above $110K for single, or above $160K for married filing jointly, then you cannot contribute to a Roth IRA.

If you want to contribute to a traditional IRA, then you follow the rules for an "active participant" in an employer plan. In particular, if your income is above $50K for single, or $70K if married filing jointly, then you cannot make a deductible contribution to a traditional IRA.

Answer 3

Yea, the whole ballgame is starting young. The key is that you need time for the "Magic of compounding interest" to kick in. You need to get to a good lump sum of money as soon as possible and at a certain point your savings skyrockets, not so much because of your continued additions to your savings but just because of the interest on this growing lump sum of money. For example you don't get a lot of interest on $1784, but when you are 47 and you have $210,000 in a mutual fund and have a good year you are going to make HUGE money that year. Don't do what most do and wait to start saving when they are 32, you cost yourself literally millions of dollars. Mutual funds are by far the best and safest way to save and you can do that through a Roth IRA. A Roth is just a "vehicle" that is available that allows you to save after tax dollars but when you are geezing and take it out, there is no tax at that time. It's a good deal. If the company you work for allows a savings/pension program that allows for pre-tax wages to be invested then that's a good deal also and maybe you can find a way to do both. That reduces your taxable income obviously, but with these savings there will be a tax when you take them out. Stocks can be very risky, that is, individual company stocks like Procter Gamble, GM etc. Most people without strong knowledge of the world of investing are better off with mutual funds which are just conglomerations of individual stocks within in one fund. They are professionally managed and at least in my experience rarely lose money and at worst don't lose anything but break even. Some can do very well, and you can always move to another mutual fund if one isn't performing.

Answer 4

Yes, I think the roth ira contribution is 4000. There is an income limit, so as long as you don't make more than the limit you can