As an advisor who helps individuals plan for retirement and companies with their corporate-sponsored plans, I am often asked, “Can I contribute to the Roth portion of my 401(k) plan if I already put money in my individual Roth IRA?” The answer is a resounding “YES!” If you’re contributing to an individual Roth IRA, you can participate in the Roth portion of your company’s 401(k) plan and vice versa.

Remember to be mindful of the annual limits. You don’t want to get a slap on your wrist from Uncle Sam because you exceeded your contribution cap. If you’re under the age of 50, the most that you can put into your 401(k) account is $22,500. That amount goes up to $30,000 for folks over 50. This doesn’t include the company match; only your contributions are factored into this number.

For individual Roth IRA account owners, the most you can contribute this year is $6,500 ($7,500 for those over 50 years old).  Plus, if you make too much money, you technically aren’t supposed to contribute to a Roth IRA. If you’re married, filing jointly and have a Modified Gross Adjusted Income of at least $228,000, you make too much to participate. The same goes for the singles making $153,000.  There is a work around to the income limits known as a backdoor Roth IRA, which will be covered in a later article.

Here are the benefits of contributing to the Roth portion of your 401(k) plan:

  1. Savings limit is over 3 times as much as an individual Roth IRA – $22,500 vs. $6,500.
  2. No income limits apply to participating in the Roth 401(k). That’s right! So, when Jeff Bezos ran Amazon, even he could have been eligible to participate in the Roth portion of his company’s 401(k) plan.

Our goal is to keep you informed and educated as you prepare for retirement. Do you have additional questions or are you curious about a particular topic? We’d love to hear from you. Fill out this form to get in touch!

Take care & enjoy the day!



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