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Can You Max Out a 401(k) and an IRA?

By
Laura Adams, MBA,

Q. I was told that I can’t fully fund my 401(k) if I also max out my Roth IRA. They said the limit I could contribute was a total of $16,500 for both. Can you shed light on this discussion?

A. Don’t let anyone keep you from contributing as much as possible to your retirement accounts! You can max out both a 401(k) and an IRA in the same year. For 2011 you can contribute up to $16,500 (or $22,000 if you’re 50 or older) to your 401(k) and contribute an additional $5,000 (or $6,000 if you’re 50 or older) to either a traditional or a Roth IRA.

Q. I work for a not-for-profit hospital and have a 403(b) retirement account. If I max it out at $16,500 per year, can I still contribute to a Roth IRA?

A. Absolutely! Just as with a 401(k), you can max out both a 403(b) and an IRA in the same year. The contribution limits are the same as I stated above.

Q. Is it possible to max out my retirement plan at work and to also contribute $5,000 to a traditional IRA and $5,000 to a Roth IRA?

A. As I mentioned above, you can fully fund both a retirement plan at work and an IRA. However, you can only contribute a total of $5,000 (or $6,000 if you’re 50 or older) to an IRA. You can split those contributions between a traditional and a Roth account in any proportion you like. For example, you could contribute $1,000 to a traditional IRA and $4,000 to a Roth IRA for 2011.

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About the Author

Laura Adams, MBA

Laura Adams received an MBA from the University of Florida. She's an award-winning personal finance author, speaker, and consumer advocate who is a trusted and frequent source for the national media. Her book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show. 

 

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