Question: Can I contribute to both and IRA and 401k at the same time?
I am planning on getting a Traditional IRA plan so I can put away $5,000 tax-free for this year. However, my company has been discussing offering a 401(k) plan to employees.
If I invest $5,000 into a Traditional IRA account this year and my company introduces a 401k plan later this year, am I still able to contribute to both my IRA and 401k in the same year?
I would appreciate any guidance.
You, you can contribute to both a 401k and IRA. If you have the financial ability to contribute to both, you should. You also have the option of contributing to a Roth IRA with your after-tax income in order to allow that money to grow tax free as long as you are under the income limitations that apply to a Roth IRA. However, with the Traditional IRA, you can contribute up to $5,000 in 2012, while still being able to contribute up $17,000 to your 401(k) in 2012. If you have specific tax questions, please run them by your accountant or a tax professional.
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