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Can You Have a Roth IRA and a 401(k)?

July 31, 2020
401(k), Investing, IRA, Personal Finance, Roth IRA
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Yes, you can contribute to a Roth IRA and a 401(k) at the same time.

Can you have a Roth IRA and a 401(k)?

  • You can contribute up to $19,500 in 2020 to a 401(k) plan. If you’re 50 or older, the annual contribution maximum jumps to $26,000.
  • You can also contribute up to $6,000 to a Roth IRA in 2020. That jumps to $7,000 if you’re 50 or older. The maximum contribution limits were the same in 2019, and you have until April 15, 2020, to make a contribution for 2019.

If you can max out both plans, congratulations: You’re well on your way to retirement success.

» Check out our top picks for the best Roth IRA accounts

How to choose between a Roth IRA and a 401(k)

If you can’t contribute the maximum to both types of accounts, don’t fret. Most of us fall into that group. The ideal amount to save for retirement will vary by your financial situation and your overall goals. Check out our retirement calculator to measure your progress.

If you’re trying to figure out which type of account is the best place for your hard-earned dollars, start here:

  • If your employer offers a matching contribution in your 401(k) plan, get as much of that free money as you can.
  • Once you’re getting the full match, consider the pros and cons of a Roth IRA versus a 401(k). A lot will depend on the 401(k) you have. Some plans offer a good selection of low-cost investments; others, not so much. Some employers cover the plan’s administrative costs; others pass on those costs to employees. The beauty of an IRA (whether Roth or traditional) is that you can open one at just about any discount broker, with no account fees and access to a wide variety of low-cost investments.

Still not sure which account is best for you?

» Find out how to invest your IRA

Here are some of our top picks for the best Roth IRA accounts:

Trade Fee

$0.00

$0.00

Account Minimum

$0

$0

Promotion

None

None

no promotion available at this time

Trade Fee

$0.00

$0.00

Account Minimum

$0

$0

Promotion

Up to $600

Up to $600

cash credit with qualifying deposit

Management Fee

0.25%

0.25%

Account Minimum

$0

$0

Promotion

Up to 1 year

Up to 1 year

of free management with a qualifying deposit

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