If I Contribute To A 401k Can I Contribute To A Traditional IRA or Roth IRA?

Do you currently contribute to a 401k and are considering adding an IRA to your retirement savings plan? In 2024, you can contribute up to $7,000 to either a traditional IRA, Roth IRA, or a combination of both. If you are 50 years or older, you can make an additional catch-up contribution of $1,000 on top of the standard limit.

Your ability to deduct contributions to a traditional IRA or contribute to a Roth IRA will be determined by your Modified Adjusted Gross Income (MAGI) if you are covered by a 401k or another employer-sponsored plan. Your income and filing status will dictate how much you can contribute and deduct for a traditional IRA, as well as how much you can contribute to a Roth IRA.

For specific income brackets and details on contribution limits based on your filing status, visit irs.gov for more information. Be mindful of over-contributing to your IRA, as exceeding the limits can result in a 6% excess tax penalty. If you realize you have contributed too much, withdraw the excess amount before filing your taxes to avoid penalties.

Take the necessary steps to avoid over-contributions and be sure to calculate any earnings on excess contributions that need to be withdrawn. Educate yourself on the limits and guidelines pertaining to your specific situation to effectively manage your retirement savings. Your proactive approach to saving and investing for the future is commendable and will benefit you in the long run.

Darryl Jarmosco, CFP®, ChFC®, specializes in retirement planning in Grand Haven, MI.

Securities offered through Registered Representative of Cambridge Investment Research, Inc. a Broker/Dealer, Member FINRA/SIPC. Advisory services through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Jarmosco Financial Advisory are not affiliated. Cambridge does not offer tax or legal advice. Fixed insurance services offered through Jarmosco Financial Advisory