If I contribute to my company’s 401(k) can I also contribute to a Roth IRA?
Gosh I hope so. Otherwise I’m in deep doo-doo.
no shit, me too - my company’s CFO just said “[he] doesn’t think so, but [he]'ll check”
My financial advisor’s office in New York is closed and I wanted to see if I can get an answer ASAP.
Sorry. I didn’t mean to be so opaque.
I’m pretty sure the only restriction on Roth IRA is your income. At least that is how I understand the situation and have acted accordingly.
I believe the correct answer is that you can, up to a maximum % relative to your income level or a specific cap on the Roth IRA, though I can’t recall at the moment what it is. I would research it at Motleyfool.com or other “investments in plain English” type website.
If the contributions are to a traditional IRA, there is no issue. My understanding, however, is that the Roth IRA was sort of designed to be like a 401(K) for businesses or self employed folks who otherwise didn’t have access to one. It can also be used to supplement a 401(K) if you are one of those people (like me) who doesn’t otherwise want a fixed (high) percentage automatically stuck into the 401(K) because of variable expenses, but occasionally has some extra money to sock away and wants a low tax solution to do so.
I’m aware of the income limits; I suddenly got a jolt of fear that contributing to a 401K made you ineligible to contribute to a Roth (something they might have buried in the paperwork that I never looked at and only signed)
Income limits aside, you can contribute to both your 401(k) and IRAs. The limit for IRAs is $5,000 if you are under 50, $6,000 if 50 or over. This amount can be distributed between Traditional and Roth IRAs any way you wish, but the maximum combined total is $5/6k.
These amounts are in addition to the $16,500 401(k) limit for under 50s and $22,000 for 50 and over. Specific company 401(k) plans may also impose a percentage of salary limit, but that is a limit that the company has set, not the government.
My company plan is specifically designed to allow that. Once I exceed the $22,000 contribution limit all future contributions are after tax and are added to a Roth account.