Seniors, should you have both a 401(k) & IRA?

Having more than one retirement plan can change the tax rules and benefits you receive.

When your income exceeds annual thresholds for your tax filing status, you might get fewer or no tax benefits for having a retirement plan at work and a traditional IRA.

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How much can you contribute to retirement accounts?

For 2022, workplace retirement plans, such as a 401(k) or 403(b), allow you to contribute up to $20,500 or $27,000 if you’re over age 50.

What are the differences between traditional and Roth retirement accounts?

With any traditional account (such as a traditional 401(k) or traditional IRA), you make pre-tax contributions, giving you a nice tax deduction in the year you make them.

When you use a Roth account (such as a Roth 401(k) or Roth IRA), you can only make after-tax contributions, which don’t offer any tax benefit in the current year.

Who qualifies for a Roth IRA?

If your income is too high to qualify for deductible traditional IRA contributions when participating in a workplace retirement plan, consider using a Roth IRA instead.

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