Can You Have a 401(K) and an IRA?

This is a great question. The answer is yes, you can have both. Should you have both? It depends.

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Everyone knows that it’s important to save for retirement. But not everyone knows how. This is because there are many different ways you can save for retirement—either through your employer or on your own—and the different options may make retirement planning feel like solving a Rubiks’ cube to most.

Our customers have access to a personalized retirement plan, which offers recommendations on how they should save for retirement. Depending on your plan and personal situation, our advice can sometimes be to contribute to both a 401(k) through work while also contributing to an IRA on your own.

Generally, you can contribute to both a 401(k) and an IRA at the same time.

Retirement Savings Calculator

We’ll break down how you should be thinking about contributing to multiple different types of retirement accounts, as we’ll also go over important tax considerations to be aware of.

The first step is to figure out how much you should be saving for retirement.

Having more than one retirement account can enable you to save even more, so it’s important to know which types of accounts you are allowed to contribute to simultaneously. You also need to know how much you need to save in order to reach your retirement goals, because not knowing how much to save could actually lead you to save more than what you’ll need.

If your employer offers a match, contribute to that plan first and aim to get the total match.

If your retirement plan recommends saving less than the maximum contribution limit of an employer-sponsored plan—which is $19,500 or $26,000 annually, depending on your age—it may make sense to only save for retirement within that one account.

If your employer offers a matching contribution, you should strongly consider contributing up to that point. For example, your company may match 50% of what you contribute for a total of up to 3% of your salary. If this were the case and you contributed 10% of your salary, you’d get an additional 3% match—think: free money—from your employer.

If you need to save beyond what you can put in your employer-sponsored plan, an additional account can help you save more.

You may find that the amount you need to save is more than what you’re allowed to put into your employer-sponsored retirement plan. Contributing to an additional retirement account can help you make sure you’re saving enough, as well as provide the tax benefits that come with accounts that are specifically used for retirement purposes.

For example, you could fund both a 401(k) and a Roth IRA. This enables you to save more, and also gives you additional tax benefit flexibility. If you’re under 50, maxing out both accounts would allow you to save $25,500 a year for retirement. If you’re under 50, married, and both spouses are working, you both could max out a 401(k) and an IRA, and end up saving $51,000 a year for retirement between the two of you.

Tax Considerations

It’s important to be aware of how each type of retirement account works, as well as how the tax treatment of each may affect you. The below table outlines the main differences between employer-sponsored plans and individual plans, as well as the tax differences between Traditional accounts and Roth accounts.

If you think you’ll be in a lower tax bracket in retirement compared to where you’re at now, consider saving in a pre-tax retirement account. If you think you’ll be in a higher tax bracket in retirement compared to where you’re at now, consider saving in a post-tax Roth retirement account. If you’re not sure if a Traditional or Roth is best for you, we’ve got a free calculator to help you decide.

Types of Retirement Accounts


Tax-Deferred aka Pre-Tax




401(k), 403(b), TSP

  • Contributions are deducted from your paycheck before taxes.
  • The account grows tax-deferred over time.
  • You’ll pay taxes when you withdraw in retirement.
  • May include an employer match.

401(k), 403(b), TSP

  • Contributions are made after taxes.
  • The account grows tax-deferred over time.
  • May include an employer match, which are placed into a Traditional 401(k).
  • Tax-free distributions in retirement.



  • Tax deduction for eligible contributions.
  • The amount of tax deduction for Traditional IRAs can vary depending on your income and whether you’re covered by a retirement plan at work.
  • The account grows tax-deferred over time.
  • You’ll pay taxes when you withdraw in retirement.


  • Contributions are made after taxes.
  • The account grows tax-deferred over time.
  • Eligibility is determined by income level.
  • Tax-free distributions in retirement.

Need help getting on track?

We provide advice on which retirement accounts you should be using, how much you should be saving in each one, and how you should think about the order of operations for funding each account. You can even sync your 401(k)s and other financial accounts to see an overall picture of your finances. Get started or log in to complete your retirement plan and see your personalized savings advice—all in just a few minutes.

Our team of CERTIFIED FINANCIAL PLANNER™ Professionals also offers advice packages for retirement planning and more.

Betterment is not a tax advisor, nor should any information herein be considered tax advice. Please consult a qualified tax professional.