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RETIREMENT
MARCH 23, 2021

Can I contribute to a 401(k) and an IRA?

Answered by
Debra Greenberg
Director, Retirement and Personal Wealth Solutions, Bank of America
Yes, you can contribute to both a 401(k) plan at work and an IRA. However, if you have access to a 401(k), income level dictates whether you qualify for the tax deduction of your IRA contributions (PDF).

Which retirement plan should I prioritize?

Because the tax advantages offered by 401(k)s and IRAs are so powerful, it can be helpful to contribute the maximum allowable for both accounts, if possible. This is especially impactful during peak-earnings years. If your employer matches your contributions, it may be a good idea to prioritize your 401(k) contributions.
The amounts you can contribute to your employer's 401(k) plan and IRA depend on your age. You can find out more about the maximum annual contribution limits (PDF).

Can you deduct IRA contributions?

If you or your spouse is covered by a workplace retirement plan like a 401(k), you can fund a traditional IRA and deduct the full contribution, or a portion of it, only if you meet certain income requirements. Whether or not to invest in a traditional IRA is something to discuss with your tax professional.
As you look to take advantage of the many ways the IRS tries to help people save for retirement, you should consider your overall tax picture. Your retirement is important, and it's a discussion you need to have with your accountant or tax professional.
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Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.
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