Roth IRA Contribution Limits 401(k) Plan FAQs
A Roth IRA is an individual retirement account that allows you to save after-tax money for retirement on a tax-deferred basis. Earning potential, contribution limits and withdrawal rules are all different from traditional IRAs.
You are allowed to split contributions between a Roth IRA and 401(k) accounts, or any other combination of after-tax and pre-tax plans; however, your combined contributions cannot exceed $19,500 (or a maximum of $26,000 if you are eligible for catch up contributions).
Roth IRAs offer more flexibility in terms of investment choices, no minimum distribution age and contributions can still be made after retirement. On the other hand, 401(k) plans offer employer matching contributions which can significantly increase the savings rate and often contain lower management fees than Roth IRAs.
Yes, any contributions made over the IRS-specified limits will be subject to taxes and penalties.
Yes, you can contribute up to the maximum limits of each account type in one year.
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.
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