Can I Contribute To Both A 401k A Roth Ira ?
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If you want to know whether you can contribute to both a 401k and a Roth IRA, the answer is yes. In fact, this option of retirement saving could be beneficial for a lot of people who want to ensure that they have save sufficient money for their retirement.
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Most people wonder why should they contribute to a Roth IRA when they already have a 401k retirement plan. There are several reasons for this. It is quite possible that you have made the maximum possible contribution for the current year to your 401k plan and now have the means to save more for your retirement. Therefore, it makes financial sense to also contribute to a Roth IRA.
Many times investment vehicles like mutual funds, stocks and bonds are not an option through the 401k plan. In which case, by investing into a Roth IRA, a person can control where his money is invested, and he will be able to select his investment vehicles.
A Roth IRA does not have as many restrictions as a traditional IRA. Although you can contribute larger amount to a traditional IRA, you cannot make the withdrawal until you reach 70.5 years of age. However, with a Roth IRA this is not the case and you can contribute any money as long as it is earned. Therefore, an option available for people who contribute to both 401k and Roth IRA is that they can withdraw money from their 401k retirement plan and then contribute it to the Roth IRA, which is tax free.
Experts advise that a person should only contribute that much money into a 401k plan where he can get maximum matching contribution from his employer. Thereafter, he should compare the options of investments between the 401k and Roth IRA. If the 401k plan offers better investment options, the person should increase his contribution to the plan. Or else, he should concentrate on putting aside more money in the Roth IRA.
The best part is that by contributing to a 401k plan and a Roth IRA, you not only reduce your taxable income, you also manage to save tax free money for your retirement.
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