Can You Contribute to Both an IRA and a 401(k)? Here's What You Need to Know

Yes, you can contribute to an IRA and a 401(k) simultaneously, but your eligibility depends on your income level and which type of IRA you choose. While employer-sponsored plans like 401(k)s are excellent for retirement savings—especially with employer matching—IRAs offer unique tax advantages and investment flexibility that can complement your workplace plan. Understanding the income limits and rules helps you maximize your retirement savings strategy.

Traditional IRA Contribution Limits for 401(k) Plan Participants

If you have a 401(k) or similar workplace retirement plan, contributing to a traditional IRA becomes more complicated. The IRS imposes income phase-out limits on who can deduct traditional IRA contributions if they participate in an employer retirement plan.

For 2026, if your adjusted gross income (AGI) falls below the threshold for your filing status, you can contribute the full amount—currently $7,000 annually, or $8,000 if you’re 50 or older. As your income rises, your deductible contribution amount decreases. Once your AGI exceeds the upper limit, you cannot deduct traditional IRA contributions if you have a 401(k) at work.

Here’s an important note: if you’re married and filing separately, these limits are significantly more restrictive, making traditional IRA deductions nearly impossible. However, even if you can’t deduct contributions, you can still make non-deductible contributions to a traditional IRA. While less beneficial than deductible contributions, these non-deductible amounts still grow tax-deferred and may offer advantages over taxable brokerage accounts.

Roth IRA Income Thresholds: A More Flexible Option

Roth IRAs operate differently. Your ability to contribute directly to a Roth IRA depends solely on income—not whether you have a 401(k) or other workplace plan. For 2026, you can contribute the full amount if your income stays below certain thresholds. Once you exceed those income limits, your contribution amount phases out until you’re no longer eligible at higher income levels.

The advantage here is that Roth income limits are significantly more generous than traditional IRA limits for people with workplace plans. Importantly, even if your income exceeds Roth contribution limits, you can still convert a traditional IRA to a Roth IRA regardless of income level. This backdoor Roth strategy has become popular for higher earners seeking to access Roth benefits.

Why Holding Both an IRA and a 401(k) Makes Financial Sense

Contributing to both accounts provides distinct advantages that strengthen your retirement strategy. Here are the key reasons to maintain both an IRA and a 401(k):

Investment choices and control. A 401(k) limits you to a pre-selected menu of investment funds. An IRA offers substantially more freedom—you can invest in individual stocks, bonds, ETFs, or virtually any security you want. If you’d like to own Apple shares or target specific sectors, an IRA gives you that flexibility that a 401(k) typically doesn’t.

Tax diversification. Contributing to both traditional and Roth accounts spreads your tax burden across different account types. With a 401(k), withdrawals in retirement are generally taxable. A Roth IRA offers the opposite: contributions don’t get a tax deduction, but qualified withdrawals are entirely tax-free. This mix gives you control over your taxable income in retirement, letting you strategically choose which account to withdraw from based on your tax situation that year.

Roth-specific advantages. Roth IRAs carry no required minimum distributions at any age, no maximum age for contributions, and you can withdraw your original contributions penalty-free whenever needed. These features provide flexibility that 401(k)s don’t offer, making them valuable for leaving money to heirs or accessing cash in emergencies.

Higher contribution potential. While a 401(k) and IRA each have separate contribution limits, maximizing both allows you to save significantly more for retirement than using just one account. For someone committed to aggressive retirement savings, this dual approach substantially increases your nest egg.

Making the Right Decision for Your Situation

The bottom line: using both an IRA and a 401(k) can be an intelligent approach to building retirement security. An IRA supplements your 401(k) by offering investment flexibility, tax diversification, and special features your workplace plan likely lacks. Depending on your income, you may qualify for a traditional IRA deduction, a Roth IRA, or both. Many people benefit from splitting contributions between the two to leverage their combined strengths. If you’re uncertain about your specific eligibility given your income level, consulting a tax professional ensures you’re making the most of these powerful retirement savings tools.