Can the Combined Contributions to Roth IRA and ROTH 401K Be More Than Earned Income?
I understand that one can contribute no more than one’s earned income to an IRA.
My question is that my daughter has just started working and is contributing 100% of her paycheck to a ROTH 401K. Can she still contribute $6000 to a ROTH IRA? In other words, can the combined contributions to 401K and IRA be more than gross earned income.
For example, if her income is $10,000 and she contributes 100% to her ROTH 401K. Can she still contribute $6000 to a ROTH IRA?
Permalink Submitted by Alan - IRA critic on Tue, 2021-08-31 20:33
Yes, when the 401k contributions are Roth, her W-2 will show Box 1 taxable income which can be used for Roth IRA contributions, therefore two types of contributions made from the same income.
Permalink Submitted by Sue Shea on Wed, 2021-09-01 16:44
Many thanks for your answer. Sue
Permalink Submitted by William Tuttle on Thu, 2021-09-02 01:20
Only pre-tax employer retirement plan contributions reduce the amount available for the self-employed health insurance deduction and reduce qualified business income (QBI) for the QBI deduction. Roth 401k contributions are the gift that keeps on giving.