Contributing to an IRA and Roth IRA if You Already Have a 401K – Non Deductible IRA and Maximum Tax Deductible Contributions

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“Can I Contribute to an IRA, Roth IRA and a 401K if I have access to all these accounts? What are the limits and rules of doing so?” This is the kind of question I get fairly often and one that I actually had to recently sort out for myself. To determine if and how much you can contribute to multiple tax advantaged accounts you need to meet differing modified adjusted gross income (MAGI) limits and qualifications as discussed below. IRS tables and links to more detailed articles for all types of tax payers are also provided for your reference.


Contributing to a Traditional IRA

The maximum tax deductible IRA contribution (see annual limits) for the latest tax year is up to $5,500 (or $6,500 if you are 50 or older). However to determine your tax deductible contribution limit, you need to consider your spouse’s (if applicable) and your own income levels in light of the table below which can be broken into the 7 key scenarios described below. 

Year
IRA Contribution Limit
IRA Contribution - Tax Deduction Qualification Income Phase-out Ranges
2017
$5,500 ($6,500 if > 50 years old)
(Single and have Employer Plan) - $62,000 to $72,000
(Married and have Employer Plan) - $99,000 to $119,000
(Married Filing Separately and have Employer Plan) - $0 to $10,000
(Married and Spouse has Employer Plan) - $186,000 to $196,000
2016
$5,500 ($6,500 if > 50 years old)
(Single and have Employer Plan) - $61,000 to $71,000
(Married and have Employer Plan) - $98,000 to $118,000
(Married Filing Separately and have Employer Plan) - $0 to $10,000
(Married and Spouse has Employer Plan) - $184,000 to $194,000
2015
$5,500 ($6,500 if > 50 years old)
(Single and have Employer Plan) - $61,000 to $71,000
(Married and have Employer Plan) - $98,000 to $118,000
(Married Filing Separately and have Employer Plan) - $0 to $10,000
(Married and Spouse has Employer Plan) - $183,000 to $193,000
2014
$5,500 ($6,500 if > 50 years old)
(S) $60,00 to $70,000
(M) $96,000 to $116,00
(M&S ) $181,000 to $191,000

  1. If you are not covered by a retirement plan at your job (like a 401K or 403b) and your spouse is not covered by a retirement plan either, there is no Modified Adjusted Gross Income (MAGI) limitation on your deductible contributions.
  2. If you are covered by a retirement plan at work, and your combined MAGI is $99,000 or less (for 2017), there is also no limitation on your deductible contributions to a traditional IRA.
  3. If you are covered by a retirement plan at your job and your MAGI is more than $99,000 but less than $119,000, you are entitled to a partial deduction, reduced by 25% for every dollar over the lower limit (or 30% if over age 50), and rounded up to the nearest $10.  If the amount works out to less than $200, you are allowed to contribute at least $200.
  4. If you are covered by a retirement plan at your job and your MAGI is more than $119,000, you are not entitled to deduct any of your traditional IRA contributions in the applicable tax year.  You are eligible to make non-deductible contributions, up the annual limit, and those contributions can benefit from the tax-free growth inherent in the IRA account. Which can be a good benefit if you plan to hold the investments for a long time and expect to have a lower tax rate at retirement since your tax free gains in an IRA are taxed as ordinary income when withdrawn.
  5. If you are not covered by a retirement plan at your job, but your spouse IS covered by a retirement plan, and your MAGI is less than $186,000, you can deduct the full amount of your IRA contributions.
  6. If you are not covered by a retirement plan but your spouse is, and your MAGI is greater than $186,000 but less than $196,000, you are entitled to a partial deduction, reduced by 50% for every dollar over the lower limit (or 60% if over age 50), and rounded up to the nearest $10.  If the amount works out to less than $200, you are allowed to contribute at least $200.
  7. Finally, if you are not covered by a retirement plan but your spouse is, and your MAGI is greater than $196,000, you are not entitled to deduct any of your traditional IRA contributions for tax year 2011.  You are eligible to make non-deductible contributions, up the annual limit, and those contributions can benefit from the tax-free growth inherent in the IRA account.

To open a low cost and effective IRA account, consider using my recommended broker – TD Ameritrade – which has no account keeping fees and can be used for all types of IRA accounts.

Roth IRA

Similar to a traditional IRA, there are income limitations when it comes to contributing to a Roth IRA. For the current year the maximum Roth IRA contribution is $5,500 (or $6,500 if 50 and older) as shown in the table below:

Year
Roth IRA Contribution Limit
Single Filer Phase Out RangeMarried, Joint Filer Phase Out RangeMarried, Filing Separate Phase Out Range
2017$5,500 ($6,500 if 50 or older)$118,000–$133,000$186,000–$196,000$0–$10,000
2016$5,500 ($6,500 if 50 or older)$117,000–$132,000$184,000–$194,000$0–$10,000
2015$5,500 ($6,500 if 50 or older)$116,000–$131,000$183,000–$193,000$0–$10,000


  1. If your MAGI is less than $118,000 (single) or $186,000 (married filing jointly), you are eligible to contribute the entire amount to a Roth IRA.
  2. If your MAGI is between the thresholds shown in the table above, your contribution to a Roth IRA is reduced pro-ratably by every dollar above the lower end of the range, rounded up to the nearest $10.  If the amount works out to less than $200, you are allowed to contribute at least $200.
  3. If your MAGI is $133,000 (single)/$196,000 (married) or more, you cannot contribute to a Roth IRA.
  4. See this article for detailed limits and conversion rules related to Roth IRAs.

Remember: The maximum combined limit on contributions that you can make to a traditional or Roth IRA is the smaller of $5,000 ($6,000 for those 50 and older) or the amount of your taxable compensation for the current tax year. This limit can be split between a traditional and a Roth IRA but the combined limit is still $5,000 or $6,000 if you are above 50.

For more details, examples and worksheets I suggest you visit the IRS website and/or talk to your financial planner.

{ 4 comments… read them below or add one }

Alex Roth August 19

What if you have a bank-based Roth IRA that only allows you to contribute to it once every year?

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Gail August 31

Then you should contribute the maximum you can, once a year.

Reply

Emily August 1

Not appreciating that the Government is ultimately in charge of our retirement accounts, DH only contributes to the 401K as much as the company will match, and then we invest into regular mutual funds. Sure, we pay more in taxes, but it’s ours whenever we want it.

Reply

PoorFuture July 27

Thanks for the info Andy, great reference. It’s ironic that an IRA plan can only be in the name of a single person, yet contribution to is tied to your martial status/income. I am a stay-at-home mom and this makes me completley reliant on my husdband’s retirment savings.

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