If I Have A 401K Plan Can A Still Contribute To An Ira?
Facts to help you determine whether or not if you have a 401K plan you can still contribute to an IRA
There are many options available to you if you want to save for your future retirement. Depending on factors such as income and filing status, you can enjoy various tax benefits by contributing to both IRA’s and 401Ks.
What is the difference between a 401K Plan and an IRA?
401K plan contributions are traditionally made with pre-tax dollars so you are lowering your reportable taxable income for each year you contribute to the plan. Traditional IRA contributions are made with after-tax dollars, so generally you get to report these contributions on your tax return and lower your taxable income by that amount.
If I Have A 401K Plan Can I Still Contribute To An Ira?
If you are participating in a 401K with your company, you can still contribute to a traditional IRA, however, this contribution may not be deductible on your tax return. Your filing status and income will determine how much if any of this contribution is deductible. If you participate in a 401K plan, but your spouse does not, your spouse can contribute to a traditional IRA and receive a full or partial tax benefit if your adjust gross income is below the phaseout levels.
How much can I contribute to an IRA?
If you have earned income, you may contribute $5,000 to your IRA for the calendar year 2009. If you earn less than $5,000, your contribution limit is the amount you earned in the calendar year. If you are age 50 and over, you can make an additional catch-up IRA contribution of $1,000.
Whether or not you enjoy a tax break by participating in both a 401K plan and an IRA, contributing to retirement accounts is a very wise move and will help to ensure a comfortable future.
Related posts
- How Much Can I Contribute To My 401K Plan At Work?
- How Much Can I Contribute To A 401K Plan?
- How Much Can I Put In My 401K?
- What Is The Maximum Pre-Tax 401K Contribution?
- Are All 401K Plans Created Equal?
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