If you've ever wondered if you could be making too much money to contribute to your employer's sponsored retirement plan, chances are that you don't need to worry. Unlike a Traditional or Roth IRA, there are no upper 401k income limits that will keep you from contributing. This makes it a very attractive option when you are considering the benefits between the IRA vs 401k. The only restriction is if you are a highly compensated employee (more on this below). In contrast, an IRA is limited by an individual’s modified adjusted gross income (MAGI). If you make too much money, you either won't be allowed to contribute to a Roth IRA or you … [Read more...]
Roth and Traditional IRA Income Limits – Can I Contribute?
Unfortunately, not everyone is eligible to stash their money away in an IRA or deduct it from their income taxes. The Internal Revenue Service (IRS) can't have people hiding too much of their income in tax-sheltered savings. Therefore, there are certain Roth and Traditional IRA income limits put in place to regulate who is able to use them to their full extent. Knowing what these limits are and if you qualify will help you make informed decisions about how you plan to use your IRA vs 401k investments. In fact, as you read below, we'll also address a common misconception about whether or not you can use an IRA to stash your savings, and … [Read more...]