Saving for retirement often means balancing different types of accounts. Many people who already contribute to a 401k or Solo 401k also consider opening an IRA to expand investment choices or boost their long-term savings. The good news is that the IRS generally allows you to contribute to both in the same tax year.
However, combining these accounts can get tricky. Your income level, tax filing status, and whether your 401k is employer-sponsored or a Solo 401k you manage yourself can all affect how much of your IRA contribution qualifies for a tax deduction — or if you can contribute to a Roth IRA at all.
If you want to know how the rules work, keep reading. By the end, you should know what limits to keep in mind and how contributing to both plans could help you build a more flexible retirement strategy.
Traditional and Roth IRA Contribution Rules if You Have a 401k or Solo 401k
You can contribute to both an IRA and a 401k or Solo 401k, but your income level affects how much you can contribute (or deduct for taxes) especially when it comes to Traditional and Roth IRAs.
Anyone with taxable compensation can contribute to a Traditional IRA, regardless of income.
Roth IRAs, on the other hand, have income limits that determine if you qualify to contribute.
📌 Also read: IRA vs 401k: Main Differences
Roth IRA Contributions When You Also Have a 401k
Roth IRA eligibility depends on your modified adjusted gross income (MAGI). If your income is too high, your allowed contribution limit may be reduced—or completely eliminated.
2025 Roth IRA Income Limits
- MAGI $150,000 or less: You can contribute up to the full Roth IRA limit ($7,000, or $8,000 if age 50+).
- MAGI over $150,000 but under $165,000: Your contribution amount gets reduced.
- MAGI $165,000 or more: You cannot contribute to a Roth IRA.
📝 Note: If you’re over the Roth income limit, you may consider contributing to a nondeductible Traditional IRA and then converting it to a Roth IRA through a backdoor Roth strategy. Taxes may apply, so it’s best to understand the implications before doing so.
Traditional IRA Contributions When You Also Have a 401k
There’s no income cap for contributing to a Traditional IRA, but your tax deduction may be limited if you participate in a 401k or Solo 401k and your income exceeds certain thresholds.
2025 Traditional IRA Deduction Limits
- MAGI $79,000 or less: You can take a full tax deduction up to the contribution limit ($7,000, or $8,000 if age 50+).
- MAGI over $79,000 but under $89,000: You qualify for a partial deduction.
- MAGI $89,000 or more: You cannot deduct your contribution, but you can still make nondeductible contributions.
What Is MAGI and Why It Matters for IRA Contributions
Your Modified Adjusted Gross Income (MAGI) determines if you qualify for certain tax benefits, including IRA deductions and Roth IRA contributions. It starts with your Adjusted Gross Income (AGI) and then adds back specific items the IRS excludes when calculating taxable income.
AGI is your total income minus “above-the-line” deductions such as self-employment tax, traditional IRA contributions, or student loan interest. Once you have your AGI, the IRS requires you to add back certain amounts to find your MAGI.
How MAGI Is Calculated for IRA Purposes
To calculate MAGI for IRA eligibility, start with your AGI and use the IRS worksheet for the applicable tax year. Then, add back only the specific items listed in that worksheet — nothing else.
Common Add-Backs for IRA MAGI
- Traditional IRA deduction
- Student loan interest deduction
- Excluded foreign earned income and housing allowances
- Nontaxable U.S. savings bond interest used for education
- Employer-provided adoption benefits
📝 Note: Certain deductions, like passive income losses or municipal bond interest, are not part of IRA MAGI calculations. Always refer to the current IRS worksheet for the exact list, as it can change slightly from year to year.
Why MAGI Matters
Your MAGI directly affects:
✅ Roth IRA contributions: Determines if you qualify or if your limit phases out.
✅ Traditional IRA deductions: Impacts whether your contribution is fully deductible.
✅ Other tax benefits: Some education credits and premium tax credits use MAGI-based rules, but each has its own definition.
📝 Note: MAGI definitions can vary across programs. For IRA-related calculations, always use the IRS worksheet specific to Traditional IRA deductions or Roth IRA eligibility, not the version used for other tax credits.
How to Calculate Your MAGI
Your Modified Adjusted Gross Income (MAGI) is based on your federal income, not your state return. To calculate it correctly, you’ll need to use the worksheets provided by the IRS.
Where to Find the Worksheets
IRS Publication 590-A includes the official worksheets:
- Worksheet 1-1 for calculating MAGI related to Traditional IRA deductions
- Worksheet 2-1 for calculating MAGI for Roth IRA contributions
These worksheets guide you through the adjustments step by step — starting from your AGI and adding back specific amounts to find your MAGI.
📝 Note: If you have complex income sources (e.g., self-employment earnings or foreign income exclusions), a tax professional or accountant can help ensure you apply the correct adjustments.
Roth IRA vs Traditional IRA: What’s the Difference?
Both Traditional and Roth IRAs are popular ways to save for retirement, but they differ in how and when you pay taxes. Knowing these differences can help you choose which account better fits your financial goals.
- Contributions may be tax deductible, depending on your income and participation in a 401k or Solo 401k.
- Withdrawals in retirement are taxed as ordinary income.
- Required Minimum Distributions (RMDs) begin at a certain age, even if you don’t need the funds yet.
- Contributions are made with after-tax dollars.
- Qualified withdrawals are tax-free, including both contributions and earnings.
- No RMDs during the owner’s lifetime.
- Regular contributions (your basis) can be withdrawn anytime tax- and penalty-free.
📌 Also read: Roth IRA Vs Traditional IRA: Key Differences & Similarities
Combined Contribution Limits
You can contribute to both a Traditional and a Roth IRA in the same tax year, as long as you’re eligible. However, the contribution limit applies to all your IRAs combined, not to each one separately.
For 2025, the total combined limit is $7,000 (or $8,000 if you’re age 50 or older).
✏️ Hypothetical Example:
If you’re under 50 and contribute $6,000 to a Roth IRA, you can only contribute $1,000 to a Traditional IRA that same year.
📝 Note: Exceeding the combined limit may trigger IRS penalties, so it’s important to track your total contributions across all IRAs you own.
Do IRA Contributions Count Toward Your 401k or Solo 401k Limits?
No. IRA contributions are completely separate from 401k or Solo 401k contribution limits. This means you can max out your IRA and still contribute up to the full annual limit for your 401k or Solo 401k in the same year.
📌 Also read: Roth IRA Vs Traditional IRA: Key Differences & Similarities
IRA Contribution Limits and Aggregation Rules
You can contribute to both a Traditional and a Roth IRA in the same year, but the total contribution limit applies to all IRAs combined. The IRS views your Traditional and Roth IRAs as part of one overall limit.
For 2025, the combined contribution cap is $7,000, or $8,000 if you’re age 50 or older.
✏️ Hypothetical Example:
If you put $5,000 into a Roth IRA, you can only add $2,000 to your Traditional IRA for that same year.
📝 Note: Contributions that exceed the annual limit may trigger IRS penalties. It’s best to keep track of your total deposits across all IRAs.
Separate From 401k or Solo 401k Limits
IRA limits do not affect how much you can contribute to a 401k or Solo 401k. These plans follow different IRS contribution rules, so even if you reach your IRA cap for the year, you can still make the full allowable contribution to your 401k or Solo 401k.
What’s the Difference Between a 401k Plan and a Solo 401k Plan?
A regular 401k plan is typically offered by employers to their employees. It’s a workplace-based plan that lets you save for retirement through salary deferrals. You can only participate if your employer provides one, and not all do.
✅ Limited investment menu: Most plans offer a preset lineup of mutual funds, though some include a brokerage window for added flexibility.
✅ Possible employer match: Some employers contribute matching funds, but this benefit isn’t guaranteed.
A Solo 401k plan, in contrast, is designed for self-employed individuals and business owners with no employees other than a spouse. Since you run the business, you can set up the plan for yourself and contribute in two roles — employee and employer. This structure can lead to higher contribution limits than a standard 401k.
✅ Broader investment options: Many Solo 401k plans allow access to a wide range of assets. However, they must comply with IRS rules on prohibited transactions and collectibles.
✅ Flexible contribution design: Contributions can include pre-tax, Roth, or even after-tax options depending on your provider’s setup.
✅ Self-managed control: You decide how and when to contribute, giving you more flexibility in managing your plan.
📝 Note: A Solo 401k offers more control and higher potential contributions but also comes with added administrative responsibilities. Make sure to understand the IRS rules that apply before opening one.
📌 Also read: Can I Have Both a Solo 401k and a Regular 401k?
Final Thoughts
It’s generally possible to contribute to both an IRA and a 401k in the same year. Your ability to deduct Traditional IRA contributions or contribute to a Roth IRA may depend on your income and participation in a workplace plan, but contributing to an IRA can still provide an extra way to save for retirement.
It’s best to consider your income, tax situation, and contribution limits so that you can determine how much to put into each account. Use tools like IRS worksheets or consult a tax professional to calculate your limits accurately.
📌 Also read: IRA Vs 401k: Main Differences Explained
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