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Level 3
posted Nov 6, 2020 10:01:56 PM

Maximum IRA contribution

My daughter has a 401K at work. She also contributes to an IRA at a local bank. Is there a total amount that can be contributed to both separately, or both?  Thx

0 2 899
2 Replies
Level 3
Nov 7, 2020 11:26:01 AM

There are limits on both. They are based on age, filing status, income, and type of ira. Here is a link to IRS site:

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits#:~:text=More%20In%20Retirement%20Plans&text=For%202020%20and%202019%2C%20the,taxable%20compensation%20for%20the%20year

Level 4
Nov 9, 2020 9:33:44 AM

@cgmartin wrote:

My daughter has a 401K at work. She also contributes to an IRA at a local bank. Is there a total amount that can be contributed to both separately, or both?  Thx

The income limits for deductibility are lower if you have a 401(k) plan at work, so it might be better to do all saving within the 401(k) unless you've maxed it out.  

If retirement is many years away, you probably want to invest in a mutual fund with a mix of conservative and aggressive investments, not a deposit account at a bank.