Dec 10

Let’s say for 2008, I would like to contribue the $5k (max amount) to my traditional IRA and another $5k to a Roth IRA. At the same time, I’m an active participant to an employer sponsored 401k plan. I will be filing on single status. Can I do this?

4 comments so far...

  • TaxMan Said on December 10th, 2009 at 4:19 pm:

    The total you can contribute to ALL IRA plans is $5,000. If you contribute $5,000 to a Roth, you can not put anything into your Traditional (unless you are at least 50 years old and can do the $1,000 additional catch-up contribution).

    That being said, there are limitations to each plan. If you are a participant in your employer’s 401(k) plan (or any pension plan for that matter), then your Trad IRA contributions may not all be ‘deductable’. You can still make the contribution, but you may not be able to deduct it on the first page of your 1040 as an ‘above-the-line’ deduction. For example, if you are single and your modified Adjust Gross Income exceeds $63,000 and box 13 “retirement plan” is checked on at least one of your W-2s (meaning you belong to a 401(k) or similar plan), then none of your Traditional IRA contributions are deductable. You can still make them, but they will be post-tax. If your AGI is between $53,000 and $63,000, then your contributions are partially deductable, and if your AGI is $53,000 or less, then all are deductable. If box 13 is not checked on any of your W-2s then no matter what your income is, all of your Trad-IRA contributions are deductable.

    It is better to make a Roth contribution than to make a non-deductable Trad IRA contribution. But, alas, you may not be able to make a Roth contribution if you are single and your MAGI exceeds $116,000 (phase-out between $101,000 and $116,000). The limits depend on your filing status. Check out the following link for more information.

    Bottom line is, $5,000 is the max for all of your IRA contrubutions, not just your Roth or just your T-IRA contributions. If you put $2,000 in a Roth, the most you can put into your T-IRA is $3,000. Contributions to a 401(k) do NOT limit your IRA contributions.

    Good luck and great question.

  • Sharon T Said on December 10th, 2009 at 4:37 pm:

    No, the $5K limit is for both, not each. You can put all in one and none in the other or split it between the two in any combination you desire–but don’t go over $5000 total for one tax year.

  • mudbug Said on December 10th, 2009 at 4:51 pm:


  • PepsiLime Said on December 10th, 2009 at 5:43 pm:

    Sorry, but you can do $5,000 maximum between the 2 types of IRA’s. If you were age 50 or older you could do a maximum of $6,000 into the 2 types for 2008.

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