Can You Have Both a 401(k) and an IRA?
Yes, you can—and here's exactly how it works, what the limits are, and whether you should.
By CashSmartGuide Editorial Team - Last updated: January 2026 | 6 min read
You've got a 401(k) through work. You're contributing enough to get the company match. But you keep hearing about IRAs and wondering: can I have both? Am I allowed to open an IRA if I already have a 401(k)? Will it mess up my taxes?
Short answer: yes, you can absolutely have both a 401(k) and an IRA. Millions of Americans do. The IRS allows it, and for many people, it's actually the smartest move for maximizing retirement savings.
But there are some rules you need to know—particularly around contribution limits and tax deductions. Let's break down exactly how this works.
The Quick Answer
Yes, you can have both a 401(k) and an IRA. The contribution limits are separate—$23,500 for your 401(k) in 2026 (or $31,000 if you're 50+) and $7,000 for your IRA (or $8,000 if you're 50+). You can max out both if you want.
The catch: if you have a 401(k) at work and earn above certain income levels, you might not be able to deduct traditional IRA contributions on your taxes. But you can always contribute to a Roth IRA (if your income qualifies) or make non-deductible traditional IRA contributions.
The Simple Truth: You Can Have Both
The IRS treats 401(k)s and IRAs as completely separate retirement accounts. Having one doesn't prevent you from opening or contributing to the other. Think of them as two different buckets you can fill simultaneously.
Here's What You Can Do
• Contribute up to $23,500 to your 401(k) in 2026 ($31,000 if age 50+)
• PLUS contribute up to $7,000 to your IRA in 2026 ($8,000 if age 50+)
• That's potentially $30,500 total per year if you're under 50
• Or $39,000 total per year if you're 50 or older
Most people can't max out both accounts—and that's fine. The point is you're allowed to contribute to both up to their individual limits. The question isn't whether you can, but whether you should and how to do it smartly.
The Smart Strategy: Which One First?
If you can't max out both accounts (most people can't), here's the priority order that makes the most financial sense:
Step 1: 401(k) Up to Company Match
This is free money. If your employer matches 50% up to 6% of your salary, contribute at least 6%. A match is an instant 50% return—you can't beat that anywhere else.
Step 2: Max Out Your IRA
IRAs typically offer better investment options and lower fees than most 401(k) plans. Contribute the full $7,000 (or $8,000 if 50+) to your IRA before going back to your 401(k).
Step 3: Return to Your 401(k)
If you still have money left over after maxing your IRA, increase your 401(k) contributions. Work toward maxing it out at $23,500 if your budget allows.
Step 4: Taxable Brokerage Account
If you've maxed both the 401(k) and IRA, congratulations—you're in the top 5% of savers. Open a regular taxable brokerage account for additional investing.
Real-World Example
Sarah earns $75,000 and can save $1,000 monthly for retirement. Her employer matches 50% up to 6% of salary ($375/month).
• She contributes $375/month to her 401(k) to get the full match
• She contributes $583/month to her Roth IRA ($7,000 annually)
• She puts the remaining $42/month back into her 401(k)
• Total saved: $1,000/month plus $375 employer match = $1,375/month
The Tax Rules You Need to Know
This is where it gets slightly complicated. Having a 401(k) can affect whether you can deduct traditional IRA contributions, depending on your income.
Traditional IRA Deduction Rules (If You Have a 401(k))
Single Filers (2026):
• Income under $79,000: Full deduction allowed
• Income $79,000-$89,000: Partial deduction (phases out)
• Income over $89,000: No deduction
Married Filing Jointly (2026):
• Income under $126,000: Full deduction allowed
• Income $126,000-$146,000: Partial deduction (phases out)
• Income over $146,000: No deduction
These limits apply only if you (or your spouse) have access to a workplace retirement plan like a 401(k).
What If You Can't Deduct Traditional IRA Contributions?
If your income is too high to deduct traditional IRA contributions, you have two better options:
Option 1: Contribute to a Roth IRA instead. No upfront deduction, but all withdrawals in retirement are tax-free. Income limits: $150,000 (single) or $236,000 (married) for 2026.
Option 2: Make non-deductible traditional IRA contributions, then convert them to Roth (backdoor Roth IRA). This works at any income level.
Roth IRA: The Simple Solution
For most people earning under $150,000 (single) or $236,000 (married), Roth IRA is the cleanest option when you have a 401(k). You can always contribute regardless of your 401(k) participation, and you never worry about deduction limits. Plus, tax-free retirement withdrawals are awesome.
Should You Actually Do Both?
Just because you can doesn't mean you should. Here's when having both makes sense and when it doesn't.
You Should Have Both If:
✓ You're maxing out your 401(k) match and still have money to save
✓ Your 401(k) has high fees or limited investment options
✓ You want more control and flexibility with investments
✓ You're saving aggressively for early retirement
✓ You want tax diversification (some pre-tax, some post-tax)
Skip the IRA If:
✗ You're not maxing your 401(k) match yet (do that first!)
✗ You have high-interest debt (over 6-7%)
✗ You don't have a 3-6 month emergency fund
✗ Your 401(k) has excellent, low-cost investment options
✗ You're barely scraping together retirement savings as-is
For most middle-income earners, the sweet spot is: get your full 401(k) match, then max out a Roth IRA, then increase 401(k) contributions if you can. This gives you tax diversification, better investment options through the IRA, and maximizes free money from your employer.
Common Scenarios Explained
I maxed out my 401(k). Can I still contribute to an IRA?
Yes. The limits are separate. You can contribute the full $7,000 (or $8,000 if 50+) to your IRA even if you maxed your 401(k) at $23,500. Whether you can deduct traditional IRA contributions depends on your income (see rules above). Roth IRA is often the better choice if you're already maxing a 401(k).
What if I have multiple jobs with multiple 401(k)s?
The $23,500 limit applies across all your 401(k)s combined, not per employer. If you contribute $15,000 to one job's 401(k), you can only contribute $8,500 to the other. But you can still contribute the full $7,000 to your IRA on top of that.
My spouse has a 401(k). Does that affect my IRA?
If you file taxes jointly and your spouse has a 401(k), it can affect your ability to deduct traditional IRA contributions even if you don't have your own 401(k). The income limits are $236,000-$246,000 for married couples in 2026. Below $236,000, you get the full deduction. Above $246,000, no deduction.
Can I roll my 401(k) into an IRA while still working?
Usually not while you're still employed by that company. Most 401(k) plans don't allow in-service rollovers until you reach age 59½. Once you leave the job, you can roll your old 401(k) into an IRA anytime. This is actually a smart move for better investment options and lower fees.
Should I do traditional or Roth for both accounts?
This depends on your current and expected future tax brackets. A common strategy: traditional 401(k) (for the immediate tax break) and Roth IRA (for tax-free growth). This gives you tax diversification—some money taxed now, some taxed later—which provides flexibility in retirement. See our guide on Traditional vs Roth IRA for details.
What to Do Right Now
1. Check Your 401(k) Match
Log into your 401(k) account or check with HR. Make absolutely sure you're contributing enough to get the full employer match. This is priority number one.
2. Calculate How Much You Can Save
Figure out your monthly retirement savings budget. Subtract what you need for the 401(k) match. Whatever's left can go into an IRA.
3. Open an IRA If You Don't Have One
If you have extra money to save beyond your 401(k) match, open an IRA. Vanguard, Fidelity, or Schwab are all excellent choices. See our step-by-step guide to opening an IRA.
4. Choose Roth vs Traditional Based on Income
If you earn under $150,000 (single) or $236,000 (married), go with Roth IRA. If you're above those limits, look into the backdoor Roth IRA strategy.
5. Automate Everything
Set up automatic 401(k) deductions through payroll and automatic monthly transfers from your bank to your IRA. Automation removes willpower from the equation.
The Bottom Line
Yes, you can have both a 401(k) and an IRA. The contribution limits are separate, and for most people, using both is the smartest way to maximize retirement savings and tax advantages.
The key is prioritizing correctly: get your full 401(k) match first (free money), then max out your IRA (better options), then increase your 401(k) if you have more to save. This approach maximizes your employer match, gives you investment flexibility, and provides tax diversification.
Don't overthink the tax rules. If you're under the Roth IRA income limits, just use Roth—it's cleaner and simpler when you have a 401(k). If you're over the limits, the backdoor Roth strategy works at any income level. The important thing is to be saving in both accounts if your budget allows it.
Related: Learn More About Retirement Accounts
Financial Disclaimer
This article provides general educational information about 401(k) and IRA accounts and should not be considered personalized financial or tax advice. Tax laws, contribution limits, and income thresholds change regularly. Individual circumstances vary based on income, filing status, employer plan features, and state tax laws. Before making retirement account decisions, consult with qualified financial advisors and tax professionals who can analyze your specific situation and provide personalized guidance.