Can I still have a traditional IRA if I contribute to my 401(k) plan at work?

Answer:


Yes. Anyone with earned income who is under age 70 can open and contribute to a traditional IRA. The contribution limit is $5,500 for 2014 (unchanged from 2013), plus an additional "catch-up" contribution of $1,000 in 2013 and 2014 if you're 50 or older. However, you may not be able to deduct your IRA contributions if you're covered by a 401(k) plan at work. Whether or not you can deduct your IRA contributions depends on your filing status and annual income (adjusted gross income, or AGI). Specifically, for tax year 2014:

If your filing status is:Your IRA deduction is reduced if your AGI is between:Your deduction is eliminated if your AGI is:Single or head of household$60,000-$70,000$70,000 or moreMarried filing jointly or qualifying widow(er)$96,000-$116,000$116,000 or moreMarried filing separately$0-$10,000$10,000 or more

You may also qualify for a partial tax credit for amounts contributed to your traditional IRA or your 401(k) plan.



 
 
 
 
 
 
 
 
 
 
 
 
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