How to Contribute to Both a Traditional and a Roth IRA

Learn How to Maximize Your Retirement Savings with IRAs

A couple meets with a financial planner.
A couple meets with a financial planner.. Shapecharge/Getty Images

A Roth IRA and a traditional IRA are among the most valuable retirement saving opportunities after an employer-sponsored retirement plan. Both types of IRAs offer tax-deferred growth, but with otherwise different tax treatment of the contributions going in and the distributions that come out. Both traditional IRAs and Roth IRAs have their benefits, and as a result, motivated retirement savers often ask me, “Can I contribute to both a traditional and a Roth IRA?” It’s an important question, but the answer requires a little background on both types of individual retirement accounts particularly when it comes to who is eligible and the current contribution limitations.

Let's start with some frequently asked questions about IRAs to get oriented.

Who Can Contribute to an IRA?

Anyone who earns a wage during the tax year can make a contribution to an IRA. In addition, married workers can also contribute to a spousal IRA on behalf of their spouse if that spouse did not have any earned income that year. Regardless, income from interest, dividends, and capital gains alone does not permit a person to contribute to an IRA.

How Much You Can You Contribute to an IRA?

Provided your compensation is at least as much, taxpayers under 50 years old may currently contribute up to $5,500 per year to their IRA(s). Those at least 50 years old by the end of the tax year may contribute an additional $1,000 in catch-up savings annually for a total of $6,500. The contribution limit has historically been raised to keep pace with inflation, and will continue to be raised in $500 increments for every year for which there is measurable inflation.

How Does Your Income Affect Your Contribution Limit?

Although some high income tax payers have IRA contribution deduction limitations, your income does not affect your ability to actually make a traditional IRA contribution. The deduction might be limited to as low as zero, but not your contribution.

However, certain upper income taxpayers may not contribute to a Roth IRA due to the Roth IRA contribution limits and restrictions.

With these details in mind, now let's look at whether retirement savers can have and contribute to both a traditional IRA and a Roth IRA.

Can I Contribute to a Regular and a Roth IRA?

Provided you meet the earned income requirements and the income limitations for each type of IRA, you may contribute to both a Roth and a traditional IRA. In fact, many savvy investors who are qualified to make contributions to both types of IRAs do in order to reap the immediate benefits of tax deductible contributions and the long-term benefits of tax-deferred and tax-free future income. Other find that due to changing circumstances and incomes, their eligibility for tax deductible contributions or ability to contribute to a Roth may change and, therefore, fund one or both accounts in the tax years in which they can.

That said, there are still limitations to contributions. The combined amount may never exceed the annual contribution limit.

For example, should a 45-year old be eligible and choose to contribute $3,500 to his Roth IRA this year, the most he could contribute to a regular IRA for the same tax year would be $2,000 given the current $5,500 annual limit. As this limit increases over the years, retirement planning experts expect that the annual contribution will continue to hold for both types of accounts combined.

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