Yes, you can contribute to both a Roth 401(k) and a Roth IRA in the same year

The IRS treats these as separate accounts with separate contribution limits, so there is no rule against funding both. A Roth 401(k) is an employer plan; a Roth IRA is an individual account you open on your own. Because they are different types of accounts, the money you put into one does not reduce how much you can put into the other.

The catch is that your income may limit how much you can put into the Roth IRA, and your employer plan may have its own rules about whether you can have a Roth option at all. You also need to track two separate contribution limits and make sure you do not exceed either one.

Key Takeaways

  • Roth 401(k) contributions and Roth IRA contributions are counted separately, so you can fund both in the same year without hitting a combined limit.
  • Your Roth IRA contribution limit phases out if your income is above a certain threshold, which varies by filing status and changes each year.
  • Your employer must offer a Roth 401(k) option for you to contribute to one; not all plans include it.
  • You can contribute the maximum to both accounts only if your income is within range for the Roth IRA and your employer plan permits Roth deferrals.

How the contribution limits work for each account

The Roth 401(k) limit is set by the IRS each year and applies to all employer-sponsored plans combined. In 2024, the limit is $23,500 if you are under 50, or $31,000 if you are 50 or older. This limit covers all money you defer into a Roth 401(k), a traditional 401(k), or both combined — so if you put $10,000 into a Roth 401(k), you can only put $13,500 more into a traditional 401(k) at the same employer.

The Roth IRA limit is separate. In 2024, you can contribute $7,000 if you are under 50, or $8,000 if you are 50 or older. This limit is yours alone and does not change based on what you put into a 401(k). However, your income determines whether you can use the full limit or any at all.

Because these are two different types of accounts, you can contribute the full Roth 401(k) limit and the full Roth IRA limit in the same year — as long as your income qualifies you for the Roth IRA and your employer offers a Roth 401(k) option.

Income limits for the Roth IRA reduce or block your contribution

Your ability to fund a Roth IRA depends on your modified adjusted gross income (MAGI), which is usually your gross income with a few adjustments. The IRS sets income thresholds that change each year. In 2024, if you file as single, the Roth IRA contribution phases out between $146,000 and $161,000 of MAGI. If you are married filing jointly, it phases out between $230,000 and $240,000.

If your income is below the lower threshold, you can contribute the full amount. If it falls in the phase-out range, you can contribute a reduced amount. If it exceeds the upper threshold, you cannot contribute to a Roth IRA that year at all.

The Roth 401(k) has no income limit. You can contribute to it regardless of how much you earn. This is one reason some higher-income earners use a Roth 401(k) as their primary retirement savings vehicle — they can fund it even when a Roth IRA is closed to them.

What happens if your employer does not offer a Roth 401(k)

Not every employer plan includes a Roth option. If your plan offers only a traditional 401(k), you cannot contribute to a Roth 401(k) through that employer. You can still open and fund a Roth IRA on your own, as long as your income is within range.

If you want a Roth 401(k) and your employer does not offer one, you have limited options. You can ask your employer's benefits department whether they plan to add a Roth option, but there is no way to force them to do so. Some self-employed people or business owners can set up a solo Roth 401(k) on their own, but that requires self-employment income and a separate business structure.

Tracking contributions across both accounts

You are responsible for keeping track of how much you have contributed to each account. Your employer will report your 401(k) contributions on your W-2 or in your plan statement. Your Roth IRA custodian (the bank, brokerage, or fund company where you opened the account) will send you a statement and report your contributions to the IRS on Form 5498.

If you contribute more than the limit to either account, you face a penalty. The IRS charges a 6 percent excise tax each year on excess contributions that remain in the account. You can withdraw the excess and any earnings on it before your tax return deadline to avoid the penalty, but you must act quickly.

If you have multiple Roth IRAs, the contribution limit applies across all of them combined. For example, if you have a Roth IRA at one bank and another at a brokerage, your total contributions to both cannot exceed $7,000 (or $8,000 if you are 50 or older) in 2024. The Roth 401(k) limit is separate and does not include these IRAs.

Tax treatment of contributions to both accounts

Roth 401(k) contributions are made with after-tax dollars — you pay income tax on the money before it goes into the account. Roth IRA contributions are also made with after-tax dollars. Because both are funded with money you have already paid tax on, the money grows tax-free and you owe no tax on withdrawals in retirement (as long as you follow the rules).

This is different from a traditional 401(k) or traditional IRA, where contributions may be tax-deductible and withdrawals are taxed as income. If you have both Roth and traditional accounts, you need to track which is which when you withdraw money, because the tax treatment is not the same.

Frequently Asked Questions

Does contributing to a Roth 401(k) reduce how much I can put in a Roth IRA?

No. The Roth 401(k) limit and the Roth IRA limit are separate. Money you contribute to a Roth 401(k) does not count against your Roth IRA limit. However, your income may prevent you from contributing to a Roth IRA at all, regardless of what you put in a 401(k).

What if I contribute to both and then my income goes up?

If your income rises above the Roth IRA limit after you have already contributed, you may have made an excess contribution. You can withdraw the excess and any earnings on it by your tax return deadline to avoid the 6 percent penalty. Your IRA custodian can help you calculate what to withdraw.

Can I have a Roth 401(k) and a traditional 401(k) at the same employer?

Some plans allow both, but the combined contribution limit applies to both accounts together. If your plan allows it, you can split your $23,500 limit (2024) between a Roth and traditional 401(k) however you choose. Check your plan documents or ask your benefits department.

Do I need to report both accounts on my tax return?

You do not need to report Roth contributions on your tax return because they are made with after-tax dollars. Your custodian will report them to the IRS on Form 5498, and your employer will report 401(k) contributions on your W-2. You only need to report them if the IRS asks or if you are claiming a correction.