Can You Contribute to a Roth IRA and Still Participate in Your Employer-Sponsored Retirement Plan?

Shawn Plummer

CEO, The Annuity Expert

What is a Roth IRA?

A Roth IRA is a type of individual retirement account that allows you to contribute after-tax dollars. This means that you will not receive a tax deduction for your contributions, but you will be able to withdraw your contributions and earnings tax-free in retirement. Roth IRAs are often a popular choice for those who want the flexibility to withdraw their money tax-free in retirement and those who do not expect to be in a higher tax bracket in retirement.

What is an Employer-Sponsored Retirement Plan?

Your employer offers an employer-sponsored retirement plan to help you save for retirement. There are various employer-sponsored plans, including 401ks, 403bs, and pension plans. Employer-sponsored retirement plans allow you to contribute pre-tax dollars, which means you will receive a tax deduction for your contributions. The money in your employer-sponsored plan grows tax-free until you withdraw it in retirement.

Can You Contribute to a Roth IRA and Still Participate in Your Employer-Sponsored Retirement Plan?

Yes, you can contribute to a Roth IRA and still participate in your employer-sponsored retirement plan. It can be beneficial to do both, as it gives you more flexibility and options in retirement. By contributing to a Roth IRA, you can access tax-free withdrawals in retirement while still enjoying the tax-deferred growth of your employer-sponsored plan.

Contribution Limits for Roth IRA and Employer-Sponsored Plans

It is important to note that there are contribution limits for both Roth IRAs and employer-sponsored retirement plans. For the 2024 tax year, the contribution limit for Roth IRAs is $7,000 for those under 50 and $8,000 for those 50 and over. The contribution limit for employer-sponsored plans, such as 401ks, is $23,000 for those under 50 and $30,500 for those 50 and over.

Next Steps

In conclusion, contributing to a Roth IRA and participating in your employer-sponsored retirement plan can be a great way to plan for your financial future. By taking advantage of both options, you can enjoy the benefits of tax-free withdrawals in retirement while still taking advantage of the tax-deferred growth offered by your employer-sponsored plan. Consider your financial situation and consult a financial advisor before making investment decisions.

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Shawn Plummer

CEO, The Annuity Expert

Shawn Plummer is a licensed financial professional, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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