I have a 401K through my job, do I need an IRA as well?

How do I decide?

Asked by Kathleen

10 Answers

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Answered by Prateek Mehrotra, Financial Adviser in Appleton, WI
Whether you need an IRA depends on whether you are maxing out your contributions to 401(K) and whether you have enough cash left over to contribute to an IRA.

Assuming you do have cash left over, the answer to your question is YES. You can contribute to a Roth IRA, which is funded with after tax dollars and grows tax free. | 10.03.13 @ 16:47
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$commenter.renderDisplayableName() — {comment} | 12.10.16 @ 14:46
Answered by Michael Keeler, CFP®, CLTC in Las Vegas, NV
This is a hard question to answer without knowing your income and age.

If you are young and qualify to contribute to a Roth IRA, you might consider doing so after you contribute the maximum amount to get any matching in your 401(k).

Even if you are older, it might make sense to do the Roth. Having both pre-tax and post-tax money in retirement accounts gives you better flexibility with income in retirement. With the Roth IRA, you can take money out without increasing your tax bracket.

A financial adviser can help you decide what is going to work best in your personal situation. | 10.10.13 @ 15:28
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$commenter.renderDisplayableName() — {comment} | 12.10.16 @ 14:46
Answered by Kim Miller, CFP®PRO+ in Redmond, WA
The simple answer is yes you do. You need to take maximum advantage of all of your retirement savings opportunities: 401k (pre and post tax) and IRAs (preferably a Roth IRA). 401k max = $17,500 and IRA max = $5,500 = total $23,000 (under age 50). Good luck! | 09.18.14 @ 21:14
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$commenter.renderDisplayableName() — {comment} | 12.10.16 @ 14:46
Answered by Christopher Nesbitt, Insurance Agent in San Clemente, CA
You do need another retirement vehicle besides your 401k, but not necessarily an IRA. But there's too much missing info -- age, risk aversion, retirement goals and dreams, etc. -- to provide a helpful recommendation. | 01.17.15 @ 02:27
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$commenter.renderDisplayableName() — {comment} | 12.10.16 @ 14:46
Answered by Arin Moradian, Financial Adviser in Glendale, CA
No a regular IRA is not permitted by IRS as a deduction if you have a 401k .
Consider ROTH IRA, or another tax free vehicle Whole life or Variable Universal Life. | 03.04.15 @ 00:07
Comment 1  
Michael Keeler, CFP®, CLTC in Las Vegas, NV — This isn't true, Arin. A regular IRA is always permitted by the IRS. It just may not be deductible. Deductibility is based on income limits of $98,000 joint or $61,000 if single. | 03.05.15 @ 23:49
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$commenter.renderDisplayableName() — {comment} | 12.10.16 @ 14:46
Answered by Shawn Kirk, Financial Adviser in Chehalis, WA
Simple answer: Yes! Most people are under the illusion that their participation in their 401k will be "enough" to fund their retirement. The sad fact is most fall terribly short of actually saving enough money to maintain their lifestyle after retirement. If your combined gross income(if you are married-and file marriend and joint) is less than $183,000 per year or single and income is less than $116,000 per year you certainly should fund a ROTH ira. Make some spending sacrifices now(maybe don't eat out as much-put it into your Roth) and the rewards will be a retirement where $money is not a worry! | 03.26.15 @ 17:11
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$commenter.renderDisplayableName() — {comment} | 12.10.16 @ 14:46
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Answered by jay
My gross income is $121,000 for 2014. My wife and I both have retirement contribution. My son is 21 and he is full time college student. Can I open IRA account in his name and take deduction in my tax return for this year. | 03.31.15 @ 17:22
Comments 2  
MoneyTips Writing Staff, Financial Adviser in Los Angeles, CA — Jay, you may want to ask this as a new question, so that professionals will see it and be able to respond to it. | 03.31.15 @ 17:37
Phillip Christenson, CFA in Plymouth, MN — Hi Jay, no you cannot take the deduction for your Son's IRA. He would claim that on his own tax return even if you claim him as a dependent. You should still be able to contribute to an IRA if you are able to reduce your gross income through deductions. I.e. IRA eligibility is based on MAGI (Modified Adjusted Gross Income). You should also consider a Roth IRA as well. | 07.28.15 @ 19:05
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$commenter.renderDisplayableName() — {comment} | 12.10.16 @ 14:46
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Answered by Trucutu
What if I'm contributing to my employers Roth 401K, 10% of salary plus a 6% 1:1 match? I'm 25. | 03.31.15 @ 23:27
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$commenter.renderDisplayableName() — {comment} | 12.10.16 @ 14:46
Kathleen, why would you want to save all your money in a qualified account? I would not be so certain that you will be in a lower tax bracket in retirement than you are now. Depending on your situation, you may want to consider paying taxes now and not in the future. | 10.30.15 @ 20:12
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$commenter.renderDisplayableName() — {comment} | 12.10.16 @ 14:46
Answered by Carlos Contreras, ChFC® in Aventura, FL
Unless you are in the higher tax brackets, where you have discretionary income on a regular basis, I would advise against this do to the illiquid aspects of IRA's. | 01.10.16 @ 16:41
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$commenter.renderDisplayableName() — {comment} | 12.10.16 @ 14:46
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Kim Miller
Kim Miller, CFP®PRO+ in Redmond, WA

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