If you are currently working and contributing to your employer’s retirement plan, you are able to also fund a Roth individual retirement account (IRA). However, there are limitations that you must follow. The contribution limit for 2025 is $7,000. People age 50 or older🌳 can contribute up to an additional $1,000 ($8,000 total) as a catch-up amount. Still, eligibility to contribute to a Roth IRA depends on your income. The amount you are eligible to contribute is gradually reduced as your modified adjusted gross income (MAGI) rises within a certain phaseout range. Your eligibility ends totally when your MAGI exceeds a certain amount. The phaseout range and the end of eligibility vary according to your filing status, such as single or married filing jointly. 

Eligibilit♌y and Contribution Limits for a 🐭Roth IRA

For 2025, individuals can contribute up to $7,000 to a Roth IRA. Account owners age 50 and older are allowed to contribute up to an additional $1,000—an amount known as a catch-up contribution—making their total maximum contribution $8,000. However, the amount you are allowed to contribute can be reduced or totally eliminated if your income exceeds certain levels that vary according to filing status.

• 澳洲幸运5官方开奖结果体彩网:Married joint filers and qualifying surviving spouses: The amount they can contribute to a Roth IRA for 2025 declines as their MAGI rises from $236,000 to less than $246,000, and they cannot contribute once their MAGI hits $246,000 or more.
• 澳洲幸运5官方开奖结果体彩网:Single filers, heads of household, and married filing separately who did not live with their spouse at any time in 2025: The amount they can contribute to a Roth IRA for 2025 phases out as their MAGI rises from $150,000 to less than $165,000, and they are not eligible to contribute once their MAGI is $165,000 or more.
• Marrieds filing separately who lived with their spouse at any time during the year: The threshold remains unchanged for 2025. If their MAGI is greater than $0, their contribution will be reduced, and if MAGI reaches $10,000 or more, they will not be eligible to contribute.

Eligibility and Contribဣution Limits for an Employer Retirement Plan

For an individual to contribute to an employer retirement plan, they must be an eligible employee. Only those currently employed by the company are able to contribute to an employer retirement plan. However, not every current employee is necessarily eligible. Though it can vary from company to company, your plan may require workers to reach age 21 ♏or log a year of service to participate or to become fully vested in any employer contributions.

401(k)

A 澳洲幸运5官方开奖结果体彩网:traditional 401(k) is an employer-sponsored profit-sharing plan in which employees can contribute a percentage of their income to an account reserved for them. The account holds one or more investments, which can grow and—presumably years later—provide retirement income. A traditional 401(k) account is funded with pre-tax dollars, entitling the employee to a tax deduction equal to the contribution that year. Additionally, 88% of 401(k) plans offered employer contributions to worker-owned accounts as of 2021. Those employer contributions—which often match some percentage of each worker’s own contribution—typically enable 401(k) accounts to grow faster.

For 2025, the annual contribution limit for individuals contributing to a 401(k) plan is $23,500. Plan members who are age 50 or older are allowed to defer up to an additional $7,500—a catch-up contribution—of their pay, bringing their total contribution to $31,000.

403(b)

A 403(b), also known as a tax-sheltered annuity, functions basically the same as a 401(k), but is for public school employees and private non-profit organizations or other tax-exempt charitable organizations, such as churches. Iꦐnvestment choices in a 403(b) are limited to mutual funds and annuities. In contrast, 401(k) plans can offer a wider variety of investments, including individual stocks, bonds, and exchange-traded funds (ETFs)🌊 

For 2025, the annual contribution limit for indi🌟viduals contributing to a 403(b) plan is $23,500. Most employees age 50 and over can invest up to an additional $7,500 in catch-up con🔯tributions, bringing the total to $31,000.

457(b)

A 457(b) is very similar to a 403(b) in that it is offered typically to governmental employees or tax-exempt, non-church organizations. A 457(b) plan also has the same investment options as the 403(b)—mutual funds or annuities.

The 2025 annual contribution limit for individuals contributing to a 457(b) plan is $23,500, and up to an additional $31,000 for those age 50 and over. One key advantage of a 457(b) plan is that contributions you make to it do not reduce the amount you can contribute to a 403(b) or 401(k) plan, if you’ve got access. And unlike withdrawals from a 457(b) plan, withdrawals from a 403(b) plan are subject to a 10% early withdrawal penalty if you take distributions before age 59½.

SIMPLE IRA

A Simple Incentive Match Plan for Employees IRA, or 澳洲幸运5官方开奖结果体彩网:SIMPLE IRA, lets employees and employers contribute to 澳洲幸运5官方开奖结果体彩网:traditional IRAs set up for employees. It is a good option for small employers who are not currently sponsoring a retirement savings plan. A SIMPLE IRA’s 2025 contribution limit is $16,500, which is more than twice as high as a 澳洲幸运5官方开奖结果体彩网:traditional IRA or Roth IRA’s $7,000. The catch-up contribution cap allows accounts of plan members who are age 50 or older to receive up to another $3,500. And workers aged 60 to 63 can receive a special additional catch-up contribution of up to $5,250. A worker partic🍒ipating in a SIMPLE IRA plan may contribute up to those 🅺limits.

Employers must either match employee contributions up to 3% of the employee’s compensation or make a 2% non-elective contribution to all eligible employees, whether or not the employee contributes. The employee is always 100% vested in the money in their SIMPLE IRA.

Benefits of🌳 Contributing to a Roth IRA and an Employer Retirement♌ Plan

Contributing to a Roth IRA and an employer retirement plan offers investors several benefits. The longer you are contributing to a retirement ༺account the better. Over time, your money could grow substantially due to the compounding effect of market gains.

澳洲幸运5官方开奖结果体彩网:Putting money into a Roth IRA gives you the benefit of tax-free growth on your investment so long as you follow certain rules, so you will not pay tax on your gains during your retirement years. This can nicely augment your Social Security income and any other income—especi൩💎ally if it is taxable—that you receive during retirement.

Contributing to your employer’s non-Roth-style retirement plan—such as a 澳洲幸运5官方开奖结果体彩网:traditional 401(k), 403(b), or 457(b)—is also beneficial. That’s because you get a tax break i♐n the form of a tax deduction for the year of contribution, by using what accountants call pre-tax dollars to invest. Additionally, when you contribute to your employer’s plan, you likely will receive a matching contribution that your employer puts into your retirement account. That enables your retirement savings to grow faster than if you were saving just your own money. 

The Bottom Line

You are able to contribute to both a Roth IRA and your employer’s retirement plan. However, you must be aware of the limits and phase-out ranges of contributions based on your tax filing status and MAGI. Contributing to both types of retirement plans gives you the benefit of both tax-free growth in a Roth account and deferred-tax growth on investments in your employer’s retirement plan. Once you start taking income from your accounts in retirement, income from your Roth IRA can ease your overall tax burden, helping to minimize your taxes. Additionally, if you don’t need income from the money that you’ve accumulated in your Roth IRA, you are not required to take a minimum distribution when you reach the distribution age—which is generally age 73 for retirement accounts that are subject to required minimum distributions (RMDs)—and can simply pass the account to your heirs tax-free.