Author Topic: 401K and Roth IRA  (Read 5221 times)

mustachianit

  • 5 O'Clock Shadow
  • *
  • Posts: 24
401K and Roth IRA
« on: December 09, 2012, 05:07:49 PM »
Hello,

I have a question.  I plan to max out my 401k plan this year.  Can I also contribute the $5000 to my Roth too or can I only contribute $17K a calendar year for retirement?  Am I making sense here?  Thanks :)


Honest Abe

  • Bristles
  • ***
  • Posts: 376
  • Emancipate Yourself from Mental Slavery
Re: 401K and Roth IRA
« Reply #1 on: December 09, 2012, 05:11:47 PM »
You can contribute to the Roth as well so long as you don't exceed the income limit

mustachianit

  • 5 O'Clock Shadow
  • *
  • Posts: 24
Re: 401K and Roth IRA
« Reply #2 on: December 09, 2012, 05:27:42 PM »
sorry what do you mean by the income limit?  My husband and I make under 100K a year together.  Does that exceed the income limit?  Do you know where I could find info. on this?  Been searching the internet and not finding answers  : (

mustachianit

  • 5 O'Clock Shadow
  • *
  • Posts: 24
Re: 401K and Roth IRA
« Reply #3 on: December 09, 2012, 05:42:13 PM »
never mind finally found my answer, thanks for the help!!! :)

grantmeaname

  • Magnum Stache
  • ******
  • Posts: 4299
  • Age: 25
  • Location: London
  • This night has silence and very little fear
    • The MMM Blogger Community
Re: 401K and Roth IRA
« Reply #4 on: December 09, 2012, 07:37:47 PM »
For anyone else coming across the thread: the limits for contributions are $17,000 ($17,500 in 2013) for 401k accounts, and $5,000 ($5,500 in 2013) for IRA accounts. You can contribute up to the max in each of them, but no matter how many 401k accounts or IRAs you have open in total you can't contribute more than the limit between all of them.

There are also other plans, like 457s, that have additional contributions allowed into them, so if it applies to you, you may be able to do $17k into a 401k,  $17k into a 403b, and $5k into an IRA. Also, if you're over 50, you can put a specified extra amount in as a "catch-up" contribution.

Emerald

  • 5 O'Clock Shadow
  • *
  • Posts: 81
Re: 401K and Roth IRA
« Reply #5 on: December 10, 2012, 07:52:23 AM »
For anyone else coming across the thread: the limits for contributions are $17,000 ($17,500 in 2013) for 401k accounts, and $5,000 ($5,500 in 2013) for IRA accounts. You can contribute up to the max in each of them, but no matter how many 401k accounts or IRAs you have open in total you can't contribute more than the limit between all of them.


To clarify, if you have access to a Roth within a 401K/TSP, can you invest up to $17,500 in the Roth or is it capped at $5500? 

rugorak

  • Bristles
  • ***
  • Posts: 374
Re: 401K and Roth IRA
« Reply #6 on: December 10, 2012, 08:59:08 AM »
403b and 401k are basically the same thing and the only difference is 403b is usually for not for profit places. The $17,000 (and $17,500 next year in 2013) limit applies in either case. If for some reason you had access to both (say you worked for a for profit and a not for profit) you still would be held to the 17,000 limit in total. Same as if you have both a regular IRA and a Roth IRA. You are limited in total to $5000 this year.

SwordGuy

  • Magnum Stache
  • ******
  • Posts: 3399
  • Location: Fayetteville, NC
    • Flipping Fayetteville
Re: 401K and Roth IRA
« Reply #7 on: December 10, 2012, 09:47:51 AM »
For anyone else coming across the thread: the limits for contributions are $17,000 ($17,500 in 2013) for 401k accounts, and $5,000 ($5,500 in 2013) for IRA accounts. You can contribute up to the max in each of them, but no matter how many 401k accounts or IRAs you have open in total you can't contribute more than the limit between all of them.

There are also other plans, like 457s, that have additional contributions allowed into them, so if it applies to you, you may be able to do $17k into a 401k,  $17k into a 403b, and $5k into an IRA. Also, if you're over 50, you can put a specified extra amount in as a "catch-up" contribution.

That's not completely accurate.  See http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/401(k)-Resource-Guide---Plan-Participants---Limitation-on-Elective-Deferrals  If you are over 50, don't forget the catch up contributions you can also make.

grantmeaname

  • Magnum Stache
  • ******
  • Posts: 4299
  • Age: 25
  • Location: London
  • This night has silence and very little fear
    • The MMM Blogger Community
Re: 401K and Roth IRA
« Reply #8 on: December 10, 2012, 03:09:47 PM »
To clarify, if you have access to a Roth within a 401K/TSP, can you invest up to $17,500 in the Roth or is it capped at $5500?
You can put up to $17,500 in a 401k of any type, be it Roth or Traditional, or a combination of the two ($8,750 in each, for example). Likewise, that $5,500 can go all in a traditional IRA, all in a Roth IRA, or a combination of the two.

That's not completely accurate.  See http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/401(k)-Resource-Guide---Plan-Participants---Limitation-on-Elective-Deferrals
What part of what I said was inaccurate?

Quote from: SwordGuy
If you are over 50, don't forget the catch up contributions you can also make.
Yeah, I mentioned that:
Also, if you're over 50, you can put a specified extra amount in as a "catch-up" contribution.

chucklesmcgee

  • Pencil Stache
  • ****
  • Posts: 613
Re: 401K and Roth IRA
« Reply #9 on: December 10, 2012, 03:44:20 PM »
You can contribute to the Roth as well so long as you don't exceed the income limit

Even if you exceed the income limit you can contribute to the Roth IRA through a backdoor contribution. Contribute to a traditional IRA, then immediately convert it to a Roth IRA (on most sites it's just a click or two). Technically a conversion from a traditional IRA to a Roth IRA requires you to pay taxes on all of the earnings at the time of the contribution, but since you immediately converted your contribution, there will be no earnings (or I suppose a dollar or two). Tah-dah, you've just contributed to your Roth IRA! Rinse and repeat in future years.

SwordGuy

  • Magnum Stache
  • ******
  • Posts: 3399
  • Location: Fayetteville, NC
    • Flipping Fayetteville
Re: 401K and Roth IRA
« Reply #10 on: December 11, 2012, 09:36:20 AM »
To clarify, if you have access to a Roth within a 401K/TSP, can you invest up to $17,500 in the Roth or is it capped at $5500?
You can put up to $17,500 in a 401k of any type, be it Roth or Traditional, or a combination of the two ($8,750 in each, for example). Likewise, that $5,500 can go all in a traditional IRA, all in a Roth IRA, or a combination of the two.

That's not completely accurate.  See http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/401(k)-Resource-Guide---Plan-Participants---Limitation-on-Elective-Deferrals
What part of what I said was inaccurate?

Quote from: SwordGuy
If you are over 50, don't forget the catch up contributions you can also make.
Yeah, I mentioned that:
Also, if you're over 50, you can put a specified extra amount in as a "catch-up" contribution.

My bad, I missed that last one.

simonsez

  • Bristles
  • ***
  • Posts: 457
  • Age: 31
Re: 401K and Roth IRA
« Reply #11 on: December 11, 2012, 02:57:24 PM »
Emerald,

Roth 401k and Roth TSP are treated the same, just like 401k and TSP are treated the same.  The totals of anything I listed in that previous sentence cannot be more than 17.5k in 2013 (e.g. 10k of your own contributions to TSP with 7.5 of your contributions in the Roth TSP would be maxing it out in 2013).  Confusion can arise when some people throw the word 'Roth' out there while not qualifying if an IRA or a 401k is being discussed.  All kinds of IRA's (traditional and Roth) fall under the 5500 threshold.