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Can I Fund a Roth IRA and Contribute to My Employer’s Retirement Plan?

You can—but it’s important to know the rules first

By

Amy Fontinelle

Updated May 06, 2023

Reviewed by Eric Estevez

Fact checked by

Vikki Velasquez

You can contribute to both a Roth IRA and an employer-sponsored retirement plan, such as a 401(k), Simplified Employee Pension (SEP), or Savings Incentive Match Plan for Employees (SIMPLE) IRA, subject to income limits. However, each type of retirement account has different annual contribution limits.

For Roth and traditional IRAs, the maximum annual contribution for 2023 is $6,500, with an additional $1,000 catch-up contribution if you’re 50 or older. If you earned less than that, the limit is your total taxable compensation for the year.

You can contribute to a Roth at any age—even past full retirement age—as long as you earn taxable income. A working spouse also can contribute to a Roth IRA on behalf of a nonworking spouse.

The 401(k) annual contribution limit is $22,500 for 2023, plus a $7,500 catch-up contribution for 2023.

Key Takeaways

You can contribute to a Roth individual retirement account (Roth IRA) and an employer-sponsored retirement plan, such as a 401(k), Simplified Employee Pension (SEP), or Savings Incentive Match Plan for Employees (SIMPLE) IRA, subject to income limits.
Contributing to both a Roth IRA and an employer-sponsored retirement plan can help you save as much in tax-advantaged retirement accounts as the law allows.
Before funding your Roth, contribute enough to your employer’s retirement plan to maximize any matching contributions.
For 2023, contribute up to $22,500 to a 401(k) and $7,000 to an IRA; catch-up amounts for those over 50 are $7,500 and $1,000, respectively.

401(k) and Roth IRA

Contributing to both a Roth IRA and an employer-sponsored retirement plan helps you save as much in tax-advantaged retirement accounts as the law allows.

The tax benefits of these accounts help your nest egg grow faster and to larger amounts than possible in non-tax-advantaged accounts. The more you contribute to your retirement savings accounts each year, the earlier you can retire, as long as you invest wisely.

Of course, it’s impossible to know which tax bracket you’ll be in at various stages in your retirement or what the tax rates will be at that time. Thus, it’s not a bad idea to have some retirement funds that you have already paid taxes on (e.g., a Roth IRA)—and some that you haven’t, such as a traditional 401(k). Then you can plan your distributions to minimize your tax liability.

If you cannot contribute the maximum allowed to an employer’s retirement plan, aim to contribute enough to max out your employer’s match.

You can also contribute to a traditional IRA even if you participate in an employer-sponsored retirement plan. However, your traditional IRA contributions may not be tax deductible, depending on your income and whether an employer retirement plan covers you or your spouse. Of course, your combined total contributions to Roth and traditional IRAs can’t exceed the annual limit.

Income Limits on Roth IRAs

Before funding your Roth, it’s a good idea to contribute enough to your retirement plan to take full advantage of any matching contribution your employer offers. It’s like getting free money, and it can help you grow your nest egg faster.

Keep in mind that if your modified adjusted gross income (MAGI) reaches a certain threshold, the amount that you can contribute to a Roth is reduced or eliminated.

The table below shows the contribution and income limits and the income phaseout ranges based on tax filing status.

2023 Roth IRA Income Limit*
Filing Status	2023 MAGI	Contribution Limit
Married filing jointly or qualifying widow(er)	Less than $218,000	$6,500 ($7,500 if you’re age 50 or older)
	$218,000 to $227,999	Reduced
	$228,000 and above	Not eligible
Single, head of household, or married filing separately (and you didn’t live with your spouse at any time during the year)	Less than $138,000	$6,500 ($7,500 if you’re age 50 or older)
	$138,000 to $152,999	Reduced
	$153,000 or more	Not eligible
Married filing separately (if you lived with your spouse at any time during the year)	Less than $10,000	Reduced
	$10,000 or more	Not eligible

^*Figures for 2022 and 2023 according to the IRS.

Can You Contribute to a 401(k) and a Roth Individual Retirement Account (Roth IRA) in the Same Year?

Yes. You can contribute to both plans up to the allowable limits in the same year. However, you can't contribute to a Roth IRA if you're married filing jointly with an income over $228,000, or filing single with an income of more than $153,000. Additionally, if you make more than $330,000, your employer cannot contribute more than $16,500 (5% of $330,000) to your 401(k).

Do Roth IRA Contributions Count Toward Your 401(k) Limit?

No, Roth IRA contributions do not count toward your 401(k) limit. However, Roth IRA contributions do count toward your total IRA limit. So, if you contribute to both a Roth and a traditional IRA, the combined amounts can’t exceed the annual contribution limit for each.

Is There a Benefit to Having Both a 401(k) and a Roth IRA?

401(k) plans have several advantages, including tax-deferred contributions and the possibility of an employer match. Because contributions use pretax dollars, you will pay income tax on that money in the future. Of course, if you’re in a lower tax bracket in retirement, you could come out ahead because your contributions would be tax deductible at your current, higher rate.

A Roth IRA is made with after-tax dollars and grows tax free. Qualified withdrawals in retirement are also tax free. These accounts are best suited for assets that would trigger substantial taxes—for example, investments with high growth potential or stocks with hefty dividends. Thus, having both accounts gives you tax-free and taxable income during retirement. They provide an important tax diversification benefit.

The Bottom Line

You can contribute to both a Roth IRA and an employer’s retirement plan. Understanding the contribution amounts and limitations can help you plan accordingly in your allocation process. Contributing diligently and accurately, particularly in meeting your employer’s matching contribution levels, may allow you to retire comfortably—or even early.

Correction—May 6, 2023: A previous version of this articled failed to address contributing to a Roth IRA and a 401(k) at the same time in one of the FAQs.

Article Sources

Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.

Internal Revenue Service. "401(k) Limit Increases to $22,500 for 2023, IRA Limit Rises to $6,500."
Internal Revenue Service. “Publication 590-A (2021), Contributions to Individual Retirement Arrangements (IRAs).”
Internal Revenue Service. "Amount of Roth IRA Contributions That You Can Make For 2023."
Internal Revenue Service. "Retirement Topics—IRA Contribution Limits."
Internal Revenue Service. "401(K) Plans - Deferrals and Matching When Compensation Exceeds the Annual Limit."
Internal Revenue Service. "Retirement Topics—Exceptions to Tax on Early Distributions."
Internal Revenue Service. "Roth Comparison Chart."

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