Background
Year 2018. I'm a Full Time Employee. I have maximum contribution of $18,500.00 towards my Employer provided 401(K) for year 2018. Can I still contribute $5,500.00 to my Roth IRA?
Yes.
What I have found out is yes as long one meets IRS criteria. But, you need to be careful when both are working because generally, your Modified AGI will surpass $200,000.00
What I have found out is yes as long one meets IRS criteria. But, you need to be careful when both are working because generally, your Modified AGI will surpass $200,000.00
Suggestion
Wait for year end and see if you still qualify with respect to Modified AGI of $189,000. I would invest my money in a stable stock/bond/saving etc. and transfer into IRA at the end of the year.Facts
- 2018 401(K) contribution limit for is $18,500.00
- 2018 Roth IRA contribution limit is $5,500.00 (conditions apply)
- One can contribute to both 401(K) and IRA (conditions apply)
Roth IRA Contribution constraint
| If your filing status is... | ||
|---|---|---|
| married filing jointly or qualifying widow(er) |
< $189,000
|
up to the limit
|
a reduced amount
| ||
> $199,000
|
zero
| |
| married filing separately and you lived with your spouse at any time during the year |
< $10,000
|
a reduced amount
|
> $10,000
|
zero
| |
| single, head of household, or married filing separately and you did not live with your spouse at any time during the year |
< $120,000
|
up to the limit
|
> $120,000 but < $135,000
|
a reduced amount
| |
> $135,000
|
zero
|
FAQ
Question: Can I contribute to Roth IRA, if I'm contributing to Employer provided Retirement Plan?
Answer: Yes. IRS clearly states this here, considering one meets the criteria.
References
- modified AGI
- Retirement Topics - IRA Contribution Limits
- Deferral limits for 401(k) plans
- Can I contribute to a traditional or Roth IRA if I’m covered by a retirement plan at work?
Epilogue
Questions and comments are welcome, so that we can improve on this concepts and anyone can use it.
