It’s a question that comes up frequently when it comes to retirement planning: Can I contribute to a 401(k) and an IRA? The simple answer is yes, you can. However, there are some caveats when it comes to deducting your IRA contributions if you participate in both types of plans. 

Fortunately for your retirement nest egg, you can contribute to both types of retirement accounts. In fact, both workplace and individual retirement accounts represent important building blocks in your retirement savings. Supplementing your workplace retirement account is a great way to boost your retirement savings and put even more of your money to work in tax-advantaged accounts. 

An added bonus: IRAs sometimes offer more investment options than the typical 401(k) plan. Just as with your traditional 401(k), you may contribute pretax dollars to a traditional IRA and then potentially benefit from tax-deferred growth. Be aware that you can only contribute pretax dollars if you stay under certain income thresholds. 

401(k) and IRA contributions limits for 2024 and 2025

While contributing to both a 401(k) and IRA is certainly allowed, there are a few considerations to keep in mind. The first is the contribution limits the IRS places on each type of account, which are outlined in the table below.¹ 

Contribution limits for 2024 and 2025

Eligibility for retirement accounts

Taxes on withdrawals 

Penalties 

Required minimum distributions 

* The IRA contribution limit does not apply to rollovers.³ 

Remember that contribution limits apply to the total of your contributions to all of your retirement accounts, either an IRA or 401(k), respectively. Note that the chart above includes the Roth option, which has been available for 401(k)s and IRAs since 2006. 

Paying attention to these limits is important. If you do contribute more to your IRA accounts than is allowed (this frequently happens for individuals making Roth contributions), you’ll face a penalty in the form of a tax on the excess contributions for each year they remain in the account. 

Putting too much into a 401(k) happens from time to time, especially for those that change jobs throughout the year, but occurs rarely if you were fully employed at only one company for all 12 months, as most plan administrators won’t allow it. 

Thankfully, if either of the situations occurs, you have until April 15 of the following year to remove the excess funds. 

If you miss that deadline, you should consider working with a tax professional to calculate any tax liability. 

IRA deduction limits for 2024 and 2025

If you save with both a 401(k) and a traditional IRA, you may also face some limits on your ability to deduct your contributions depending on your income.⁴ Contributions to a Roth are never deductible.⁴

For instance, if you are covered by a retirement plan at work: 

• You can deduct up to the contribution limit, if you’re single and your Modified Adjusted Gross Income (MAGI) is $77,000 or less for 2024 or $79,000 or less for 2025. In 2024, you can take a partial deduction if you make more than $77,000 but less than $87,000. For the 2025 tax year, the range increases to between $79,000 and $89,000. There’s no deduction if you earn $87,000 or more in 2024 or $89,000 in 2025.
• If you’re married and filing jointly, you can deduct the full amount if your MAGI is $123,000 or less in 2024 or $126,000 or less in 2025. You can take a partial deduction if you make more than $123,000 but less than $143,000 in 2024, or more than $126,000 but less than $146,000 in 2025. There’s no deduction if you earn $143,000 or more in 2024 or $146,000 in 2025.

Making pretax IRA contributions may be a great way to save on taxes and invest for retirement. If your MAGI is above the threshold, your contribution would be considered nondeductible. There may be alternative and potentially better strategies to explore instead of making nondeductible contributions. Some other avenues to consider would be a Roth IRA and a taxable brokerage account. 

Examples of how you can contribute to both plans 

Let’s look at an example of how you can combine the power of a 401(k) and an IRA to speed up your retirement savings. 

Example #1: Consider a 30-year-old earning $55,000 per year. Her first priority should be saving at least enough in her workplace retirement plan to earn the full employer match, which in her case is 50% of the first 6% saved (a typical match scenario). 

In this case, she’s saving nearly $5,000 in tax-deferred funds in her 401(k) ($3,300 + $1,650 match). However, perhaps she’s anticipating earning far more in the near future and wants to sock away some after-tax money while she’s still in a relatively low tax bracket. She could save an additional $6,000 in a Roth IRA. That brings her total annual contributions to $10,500, all of it potentially growing in tax-advantaged accounts. 

Example #2: Next, consider a married 55-year-old woman earning $300,000 per year. Say she’s maxing out her workplace 401(k) at her $20,500 yearly contribution limit. Because she’s over 50, she also gets to make a catch-up contribution of $6,500 to her 401(k). Luckily, her work matches contributions dollar-for-dollar up to 6% of her salary, which means another $18,000 in her 401(k), for a total of $45,000 that is pretax and will potentially grow tax-deferred. 

While she can also contribute $7,000 to a traditional IRA, her contributions will be nondeductible given her MAGI level. The gains associated with the nondeductible contributions will still potentially grow tax-deferred, so she decides it’s still a worthwhile retirement savings vehicle to pursue, despite the fact that it’s tied up for the next 4½ years. If she felt like she needed the money before age 59½, she could have contributed to a taxable account, where there is no age restriction for distributions. 

Retirement contribution growth over time 

FOR ILLUSTRATIVE PURPOSES ONLY. This hypothetical illustration does not reflect a particular investment and is not a guarantee of future results. Rates of return may vary. The illustration does not reflect fees, which could change the outcomes provided. 

Based on the above chart, you can see how 401(k) savings can really start adding up over time. The “no growth” end assumes a consistent contribution of $20,500 after the first-year contribution of $8,000 with zero company match and zero growth. The “8% growth” column assumes a consistent maximum contribution of $20,500 plus an 8% annual rate of return with zero company match. Both examples assume that no withdrawals were made during the investment period.

The bottom line 

Whether you’re looking for additional tax deductions or just a way to boost your savings, consider talking to a financial professional about whether opening an IRA makes sense for you. Once you retire, you may be glad you saved for all those years.