Can You Have a 401(k) and an IRA?
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Can you have both a 401(k) plan and an IRA? The simple answer is yes, and many people do. Using a traditional IRA and 401(k) plan could provide tax-deferred savings for retirement, and offer some tax breaks for contributing.
However, keep in mind that each retirement account has annual contribution limits, and that your IRA contribution could be limited by your modified adjusted gross income if you or your spouse also have a 401(k) plan.
Saving in both a 401(k) plan and a traditional IRA
Before you start contributions to either plan, be aware of the contribution limits for the year.
The 401(k) contribution limit is $23,000 in 2024 and $23,500 in 2025. (In 2024 and 2025, people age 50 and older can contribute an extra $7,500 as a catch-up contribution. In 2025, due to the Secure 2.0 Act, those ages 60 to 63 get a higher catch-up contribution of $11,250.)
The 2024 IRA contribution limit is $7,000 in 2024 and 2025 ($8,000 if age 50 and older).
With a traditional IRA, you could receive a tax deduction for your contributions every year — the amount you contribute essentially reduces your taxable income. The 401(k) offers a very similar tax break: If you contribute to a traditional 401(k) plan, your 401(k) contributions are taken out pre-tax, reducing your total taxable income.
One significant caveat: If you have a 401(k) or other retirement plan at work, or your spouse does, then your contribution to a traditional IRA may not be deductible at certain incomes. In some cases, you may be able to deduct a portion of your contribution. (Even if you’re ineligible to deduct your IRA contribution, you can still make nondeductible IRA contributions.)
» Interested in a Roth IRA instead? Here's what to know about having a 401(k) plan and a Roth IRA.
Income limits for contributing to a traditional IRA and a 401(k)
2024 IRA deduction limits
The below table outlines the IRS limits for deducting your contribution to a traditional IRA if you or your spouse are covered by a retirement plan at work.
Filing status | 2024 traditional IRA income limit | Deduction limit |
|---|---|---|
Single or head of household (and covered by retirement plan at work) | $77,000 or less. | Full deduction. |
More than $77,000, but less than $87,000. | Partial deduction. | |
$87,000 or more. | No deduction. | |
Married filing jointly (and covered by retirement plan at work) | $123,000 or less. | Full deduction. |
More than $123,000, but less than $143,000. | Partial deduction. | |
$143,000 or more. | No deduction. | |
Married filing jointly (spouse covered by retirement plan at work) | $230,000 or less. | Full deduction. |
More than $230,000, but less than $240,000. | Partial deduction. | |
$240,000 or more. | No deduction. | |
Married filing separately (you or spouse covered by retirement plan at work) | Less than $10,000. | Partial deduction. |
$10,000 or more. | No deduction. |
2025 IRA deduction limits
Filing status | 2025 traditional IRA income limit | Deduction limit |
|---|---|---|
Single or head of household (and covered by retirement plan at work) | $79,000 or less. | Full deduction. |
More than $79,000, but less than $89,000. | Partial deduction. | |
$89,000 or more. | No deduction. | |
Married filing jointly (and covered by retirement plan at work) | $126,000 or less. | Full deduction. |
More than $126,000, but less than $146,000. | Partial deduction. | |
$146,000 or more. | No deduction. | |
Married filing jointly (spouse covered by retirement plan at work) | $236,000 or less. | Full deduction. |
More than $236,000, but less than $246,000. | Partial deduction. | |
$246,000 or more. | No deduction. | |
Married filing separately (you or spouse covered by retirement plan at work) | Less than $10,000. | Partial deduction. |
$10,000 or more. | No deduction. |
How to choose between an IRA and a 401(k)
Here's a three-step process for deciding between a 401(k) and an IRA, assuming you can’t max out both:
If your employer offers a 401(k) match, consider contributing enough to get all of that free money.
Once you’re set up to get the full match in your 401(k), next consider contributing to an IRA. If you’re eligible for the tax deduction, a traditional IRA can offer a lot of benefits beyond that tax break, including access to low-cost investments and low or no administrative fees. A Roth IRA is another option.
If you’re not eligible to claim the traditional IRA tax deduction or a Roth isn’t right for you, then sticking with your 401(k) might make the most sense.
» Still not sure? Read our full article on how to decide between an IRA vs. 401(k).
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