There’s no one right way to save for retirement. There are many possible strategies to help maximize your efforts. One way to save more each year is to contribute to a Roth IRA in addition to an employer’s 401(k) plan. Not only is having both a Roth IRA and a 401(k) allowed by the IRS, but having both could also help you build a bigger nest egg. Even if you earn too much for a Roth, you have other options to use these 2 powerful savings tools at the same time.
The main content indicates that you can contribute to both traditional and Roth 401(k) plans at the same time if your employer offers both options. There are also separate rules for contributing to a Roth IRA alongside a 401(k). The content provides details about contribution limits, tax implications, and eligibility requirements.
Yes, you absolutely can contribute to both a traditional 401(k) and a Roth 401(k) simultaneously – as long as your employer offers both options. This dual approach gives you flexibility in your retirement planning strategy and potential tax advantages both now and in the future.
I’ve spent years helping people maximize their retirement savings, and this question comes up frequently Let’s dive into everything you need to know about contributing to both account types at once.
The Quick Answer (For Those in a Hurry)
Yes, you can contribute to both a traditional 401(k) and Roth 401(k) at the same time, but your total contributions to both accounts combined must stay within the annual IRS limit – $23,500 for 2025 ($30,000 if you’re 50+).
Understanding Your 401(k) Options
Before we go deeper let’s clarify the difference between these account types
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Traditional 401(k) Contributions are made with pre-tax dollars, reducing your current taxable income You’ll pay taxes when you withdraw the money in retirement.
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Roth 401(k): Contributions are made with after-tax dollars. You pay taxes now, but qualified withdrawals in retirement are completely tax-free (including earnings).
Contribution Limits When Using Both Accounts
When contributing to both a traditional and Roth 401(k), the most important thing to remember is that the combined contribution limit applies to both accounts together.
For 2025, that means:
- $23,500 maximum employee contribution if you’re under 50
- $30,000 maximum if you’re 50 or older (includes $6,500 catch-up contribution)
This limit applies to your personal contributions only. Your employer’s matching contributions don’t count toward this limit, though there is a higher overall limit when including employer contributions.
Here’s an example of how you might split your contributions:
- $11,750 to traditional 401(k)
- $11,750 to Roth 401(k)
- Total: $23,500 (at the 2025 limit)
Tax Implications of Contributing to Both
One of the biggest advantages of using both account types is tax diversification. Here’s how it works:
Traditional 401(k) Tax Benefits
- Immediate tax break (contributions reduce your taxable income)
- Tax-deferred growth
- Taxable withdrawals in retirement
Roth 401(k) Tax Benefits
- No immediate tax break
- Tax-free growth
- Tax-free qualified withdrawals in retirement
By contributing to both, you’re essentially hedging your bets against future tax rates. If tax rates go up by the time you retire, you’ll be glad you have tax-free Roth money. If they go down, you’ll appreciate having traditional 401(k) funds that were contributed when your tax rate was higher.
Which Should Get Priority? Deciding How to Split Contributions
There’s no one-size-fits-all answer to how you should split your contributions. However, here are some guidelines I share with my clients:
Consider Traditional 401(k) Priority If:
- You’re currently in a high tax bracket
- You expect to be in a lower tax bracket in retirement
- You want to reduce your current taxable income
- You need the immediate tax break to afford maximum contributions
Consider Roth 401(k) Priority If:
- You’re currently in a lower tax bracket
- You expect to be in a higher tax bracket in retirement
- You want tax-free income in retirement
- You can afford to contribute with after-tax dollars
Many financial advisors recommend splitting contributions between both types as a way to create tax diversification, giving you more flexibility in retirement.
What About Employer Matching?
An important note: Most employer matching contributions go into a traditional 401(k), even if you’re contributing to a Roth 401(k). This means the match will be taxable when withdrawn in retirement.
Some employers might match your contributions dollar for dollar up to a certain percentage of your salary (common matches are 3%, 4%, or 6%). Whatever the match, it’s essentially free money – don’t leave it on the table!
Beyond 401(k)s: Adding a Roth IRA to the Mix
Many people don’t realize they can potentially contribute to a Roth IRA in addition to both 401(k) types. For 2025, you can contribute up to $7,000 to a Roth IRA ($8,000 if you’re 50 or older), subject to income limits.
This strategy works especially well for high-income earners who want to maximize their tax-advantaged retirement savings.
For 2025, single filers with income below $150,000 and married couples filing jointly with income below $236,000 can contribute the full amount to a Roth IRA.
Real-World Example of a Combined Strategy
Here’s how one of my clients maximizes her retirement savings:
- $11,000 to traditional 401(k) (to get immediate tax break)
- $12,500 to Roth 401(k) (for tax-free growth)
- $6,000 employer match (goes into traditional 401(k))
- $7,000 to Roth IRA (additional tax-free growth)
Total annual retirement savings: $36,500!
This strategy provides both immediate tax benefits and tax-free income in retirement.
Common Questions About Dual Contributions
Can I really max out both a traditional and Roth 401(k)?
No, you cannot max out both separately. Your combined contributions to both traditional and Roth 401(k) accounts cannot exceed the annual limit ($23,500 for 2025 if under 50).
Does income affect my ability to contribute to a Roth 401(k)?
Unlike Roth IRAs, there are no income limits for contributing to a Roth 401(k). Even high earners can contribute to a Roth 401(k) if their employer offers one.
What happens to employer matching when I contribute to both?
Typically, employer matching contributions go into a traditional 401(k) account regardless of which type of 401(k) you contribute to. These matching funds will be taxable when withdrawn in retirement.
Can I change my contribution mix during the year?
Yes! Most employers allow you to change how your contributions are split between traditional and Roth 401(k) accounts throughout the year. This gives you flexibility if your financial situation changes.
Advantages of the Dual Contribution Strategy
- Tax diversification – Protection against unknown future tax rates
- Flexibility in retirement – Choose which account to withdraw from based on tax situation
- Estate planning benefits – Roth accounts can be more advantageous for heirs
- No RMDs with Roth IRAs – Unlike 401(k)s, Roth IRAs don’t have required minimum distributions
Potential Drawbacks to Consider
- Complexity – Managing multiple accounts requires more attention
- Immediate tax impact – Roth contributions don’t reduce current taxable income
- Opportunity cost – Money in Roth accounts could potentially be invested elsewhere after taxes
Making the Decision: Is This Strategy Right for You?
Contributing to both traditional and Roth 401(k) accounts might be right for you if:
- Your employer offers both options
- You want to diversify your tax strategy
- You’re uncertain about future tax rates
- You can afford to contribute meaningfully to retirement
The strategy probably isn’t ideal if:
- You need to maximize current tax deductions
- You struggle to contribute even the minimum for employer matching
- Your employer only offers one type of 401(k)
My Recommendations for Most People
For most of my clients, I recommend:
- First, contribute enough to your traditional 401(k) to get the full employer match
- Next, contribute to a Roth IRA if you’re eligible (great for additional tax diversification)
- Then, split additional contributions between traditional and Roth 401(k) based on your tax situation
This approach generally provides a good balance of immediate tax benefits and future tax-free growth.
Taking Action: How to Set Up Dual Contributions
If you want to contribute to both types of 401(k)s, follow these steps:
- Check if your employer offers both traditional and Roth 401(k) options
- Decide how much you want to contribute in total (up to the annual limit)
- Determine how to split your contributions between the two account types
- Update your contribution elections through your employer’s benefits portal
- Review and adjust your strategy annually or when your financial situation changes
Final Thoughts
Contributing to both a traditional and Roth 401(k) can be a smart strategy for creating tax diversification in your retirement savings. By understanding the rules, limits, and tax implications, you can make informed decisions about how to allocate your contributions.
Remember, retirement planning isn’t a one-time decision – it’s a process that evolves with your financial situation, tax laws, and personal goals. Revisit your strategy regularly to make sure it still aligns with your long-term objectives.
What’s your current retirement contribution strategy? Are you taking advantage of both traditional and Roth options? I’d love to hear your thoughts and questions in the comments below!
What to do if you can’t contribute to a Roth IRA and a 401(k)
If you can’t have both a Roth IRA and a 401(k), you still have options to help supercharge retirement savings.
- Have a 401(k)? Get your full employer match. If your 401(k) offers any sort of employer match, Fidelity suggests making the contributions required to get that full match because a match is like free money—and who would want to leave that on the table? For instance, if your employer matches 100% of the first 3% of your salary, make sure you’re contributing at least 3% of your salary to your 401(k).
- See if your employer offers a Roth 401(k). Check to see if your employer offers a Roth 401(k), which can be an easy way into potentially tax-free withdrawals in retirement,4 if you don’t qualify for a Roth IRA. And even if you do qualify for a Roth IRA, it may make sense for you to contribute to a Roth 401(k) to take advantage of the higher contribution limits and any match an employer might offer. Just remember, Roth 401(k) contributions follow the same rules as pre-tax contributions, such as to a traditional 401(k). For example, you won’t be able to withdraw your Roth 401(k) assets without potentially paying a penalty on any portion that is earnings until age 59½, or if separating from service in or after the year you turn 55, or you experience another qualifying event such as disability, termination of employment, or financial hardship.
- Consider a traditional IRA. If you don’t have access to a 401(k) or another workplace retirement plan, or you make too much to qualify for a Roth IRA, you could opt to open a traditional IRA. Both IRA types have the same annual contribution limits. If you meet income requirements, contributions to a traditional IRA might be tax deductible,5 but withdrawals in retirement are generally taxable.6 Consult a tax advisor to be sure of the tax differences between a traditional IRA and a Roth IRA.
- No 401(k)? Look into work-related alternatives. If you’re self-employed or an independent contractor, you may have some of the same retirement plan options as small-business owners, including the SEP IRA, SIMPLE IRA, and self-employed 401(k). These plans all have different tax benefits, qualifications, and ways to contribute, so research your options and consult a tax advisor to help you choose the best one for your situation.
- Consider a Roth IRA or a Roth 401(k) conversion. High earners who can’t contribute to a Roth IRA or deduct traditional IRA contributions can potentially convert traditional IRA or 401(k) funds into a Roth IRA. There are no income limits on Roth conversions and no limits on how much you can convert, but it comes with federal and potentially state tax bills, so check with your tax advisor to understand the full tax impact. Generally, you’ll only be able to transfer a 401(k) to a Roth IRA if you are rolling over your 401(k) or the plan allows in-service withdrawals. Another option that may be available to you is an in-plan Roth conversion. If your employer offers a Roth 401(k) option, you may be able to convert your existing pre-tax and after-tax balances to a Roth account within the plan. Some employers even offer an auto-convert feature inside their plan. You can set it up so that any after-tax contributions (if your plan allows them) are automatically converted to a Roth 401(k) at regular intervals.
Benefits of having a Roth IRA and a 401(k)
From increasing your annual retirement savings to potential tax breaks—both today and in retirement—Roth IRAs and 401(k)s could deliver on multiple levels when used together.
- A substantial savings boost While the $23,500 401(k) contribution limit for 2025 for employees under 50 is nothing to sneeze at—its up $500 from 2024)—adding a Roth IRA (or a traditional IRA, for that matter) into the mix kicks things up a notch, allowing you to save an additional $7,000 on top of your 401(k) contributions. Catch-up contributions allow those 50 or older to invest even more. For 2024, those 50 or older can contribute up to an extra $1,000 to their Roth IRA and an extra $7,500 to their 401(k). Those limits stay the same for 2025 if youre age 50 to 59 or 64 or older. But if youre age 60 to 63, you may be eligible to contribute up to $11,250 more to your 401(k) if your employers plan allows it. In other words, an individual age 60 to 63 can contribute up to $34,750 to their 401(k) in 2025. Note: Stated contribution limits are for eligible individuals, which means that each spouse in a married couple may be able to contribute up to the maximums shown.
- Access to money in a pinch before retirement Unlike a traditional IRA or a traditional 401(k), the Roth IRA is one of the few tax-advantaged accounts that allows you to withdraw the money you’ve contributed at any time for any reason without paying taxes or penalties. This means you can access some of your retirement savings in an emergency without adding to debt or selling assets in a taxable account, which could have tax implications. Though it’s generally best to build up emergency savings with $1,000 or more separately from retirement savings, knowing you can access those Roth IRA contributions if you really needed them could set your mind at ease. Your Roth IRA could serve as a source of backup emergency savings. Roth 401(k)s dont allow for withdrawals of just contributions. If taking a Roth 401(k) withdrawal, a portion of the withdrawal may be earnings.
- Present and future tax benefits Investing in a Roth IRA and a 401(k) offers potential tax advantages now and in the future. While contributions to a Roth IRA aren’t tax deductible, earnings grow tax-deferred while you save, and qualified withdrawals during retirement are generally tax-free.3 With a traditional 401(k), it’s reversed: Pre-tax contributions today reduce your taxable income which can, in turn, reduce that year’s tax bill. Any investment growth on pre-tax contributions in a traditional 401(k) is tax-deferred, and in retirement your withdrawals are taxed at your current income tax rate, except for any after-tax money you might have contributed. With the ability to choose between tax-free and taxable withdrawals, you can potentially save on taxes by managing your taxable income in retirement. For instance, if you choose to work part-time and still have taxable income, taking qualified withdrawals from your Roth IRA won’t bump you to a new tax bracket like taxable withdrawals from a 401(k) might. If you paired your 401(k) with a traditional IRA, withdrawals from both of those accounts would be taxable and may increase the amount of income taxes you pay in retirement.
- Lower required minimum distributions (RMDs) Another difference between a 401(k) or traditional IRA and a Roth IRA is that you’re not required to withdraw money from a Roth IRA after a certain age, whereas you must start taking RMDs from most traditional 401(k) plans and traditional IRAs after age 73. This gives you more flexibility in retirement to use the money in your Roth IRA when it best suits you. This also means you could choose to leave extra money in your Roth IRA—tax-free—to your loved ones after you’re gone. Just remember, inherited Roth IRAs have required minimum distributions, which will affect your heirs.