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. What if you make too much for a Roth? You can still use these two powerful ways to save at the same time.
If your employer offers both, you can put money into both traditional and Roth 401(k) plans at the same time, according to the main text. There are also different rules for putting money into a Roth IRA and a 401(k). The content gives specifics about the maximum contributions, the tax effects, and the requirements for being eligible.
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 have to pay taxes now, but when you retire, qualified withdrawals (including earnings) are tax-free.
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
You’re hedging your bets against future tax rates when you contribute to both. You’ll be glad you have tax-free Roth money when you retire if tax rates go up. If they go down, you’ll be glad you put money into a traditional 401(k) when your tax rate was higher.
Which Should Get Priority? Deciding How to Split Contributions
There isn’t a single right way to divide 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)
Even if you can’t have a Roth IRA and a 401(k), there are still ways to save more for retirement.
- Have a 401(k)? Get your full employer match. If your 401(k) plan offers any kind of employer match, Fidelity recommends making the contributions needed to get that full match. This is because a match is like free money, and no one would want to leave that on the table. For example, 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). If you don’t qualify for a Roth IRA, see if your employer offers a Roth 401(k). This can be an easy way to get tax-free withdrawals in retirement4. Some people may want to put money into a Roth 401(k) instead of a Roth IRA because the contribution limits are higher and their employer may match the amount they put in. Remember that contributions to a Roth 401(k) follow the same rules as contributions to a traditional 401(k). For instance, you might have to pay a penalty if you take money out of your Roth 401(k) before you turn 59½ years old, if you leave the military in or after the year you turn 55, or if you have another qualifying event like being disabled, losing your job, or having to deal with extreme financial hardship.
- Consider a traditional IRA. If your job doesn’t offer a 401(k) or another retirement plan, or if you make too much to be eligible for a Roth IRA, you could open a traditional IRA instead. Both IRA types have the same annual contribution limits. If you meet certain income requirements, you may be able to deduct contributions to a traditional IRA5. However, when you retire, withdrawals are usually taxed. 6: Talk to a tax pro to be sure you understand the tax differences between a Roth IRA and a traditional IRA.
- No 401(k)? Look into work-related alternatives. Some of the same retirement plan choices may be available to you as a small business owner if you are self-employed or work as an independent contractor. These include the SEP IRA, SIMPLE IRA, and self-employed 401(k). All of these plans offer different tax advantages, eligibility requirements, and ways to contribute. Learn about your choices and talk to a tax professional to help you pick the best one for you.
- Consider a Roth IRA or a Roth 401(k) conversion. People with high incomes who can’t put money into a Roth IRA or deduct traditional IRA contributions may be able to move money from a traditional IRA or 401(k) to a Roth IRA. You can convert as much or as little as you want, and there are no limits on your income. However, you may have to pay federal and possibly state taxes, so talk to your tax advisor to get the full tax picture. Most of the time, you can only move money from a 401(k) to a Roth IRA if you are rolling over your 401(k) or the plan lets you take money out while you are still working. A Roth conversion inside of your plan is another choice you may have. If your employer offers a Roth 401(k), you might be able to move your current balances from a pre-tax and after-tax account to a Roth account within the plan. Some employers even offer an auto-convert feature inside their plan. If your plan lets you, you can set it up so that any after-tax contributions are automatically turned into a Roth 401(k) at regular times.
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.
- An extra $7,000 in savings on top of your 401(k) contributions. The $23,500 401(k) contribution limit for 2025 for employees under 50 is already a good amount (it’s up $500 from 2024), but adding a Roth IRA (or a traditional IRA, for that matter) ups the ante, letting you save an extra $7,000. People aged 50 and up can invest even more with catch-up contributions. People aged 50 and up can add up to an extra $1,000 to their Roth IRA and an extra $7,500 to their 401(k) in 2024. They will stay the same in 2025 if you are 50 to 59 years old or 64 or older. But if you are between the ages of 60 and 63, your employer plan may let you add up to $11,250 more to your 401(k). In other words, in 2025, a person aged 60 to 63 can put up to $34,750 into their 401(k). Note: The amounts listed for contributions are for people who are eligible. This means that if a couple is married, each partner may be able to contribute up to the amounts listed.
- You can get to your money quickly before you retire. Unlike a traditional IRA or 401(k), the Roth IRA is one of the few tax-advantaged accounts that lets you take out the money you’ve put into it whenever you want, without having to pay taxes or penalties. In a pinch, you can use some of your retirement savings this way, without taking on more debt or selling assets in a taxable account, which could have tax effects. It’s best to save at least $1,000 for emergencies separately from your retirement savings, but knowing that you can get to your Roth IRA contributions if you really need them could put your mind at ease. Your Roth IRA could be used as an extra way to save money for emergencies. Roth 401(k)s dont allow for withdrawals of just contributions. If you take money out of your Roth 401(k), some of it may be earnings.
- Tax breaks now and in the future: Putting money into a Roth IRA and a 401(k) could save you money on taxes now and in the future. You can’t deduct contributions to a Roth IRA, but earnings grow tax-free while you save, and most withdrawals made during retirement are tax-free. When you put money into a traditional 401(k), the order is different: pre-tax contributions today lower your taxable income, which can lower your tax bill that year. If you put money into a traditional 401(k) before taxes, the growth of the investments is not taxed right away. When you retire, you take money out at your current income tax rate, minus any money you put in after taxes. You might be able to save money on taxes in retirement by controlling your taxable income since you can choose between tax-free and taxable withdrawals. For example, if you work part-time and still have taxable income, drawing money from a Roth IRA won’t put you in a different tax bracket like taking money out of a 401(k) might. You might have to pay more in income taxes in retirement if you take money out of both your 401(k) and your traditional IRA. This is because withdrawals from both accounts are taxed.
- Lower required minimum distributions (RMDs): Another difference between a Roth IRA and a 401(k) or traditional IRA is that you don’t have to take money out of a Roth IRA after a certain age. However, after age 73, you do have to start taking RMDs from most traditional 401(k) plans and traditional IRAs. This means you can use the money in your Roth IRA whenever it works best for you when you retire. This also means you could leave your loved ones extra money in your Roth IRA without having to pay taxes on it. Remember that required minimum distributions apply to Roth IRAs that are passed down. This will affect your heirs.