low income – can I max fund 401k and Roth IRA?
Assume self-employed net income of $20,000. Contribute $20,000 to your 401k. Can you still contribute to your Roth IRA or does the 401k deduction eliminate the additional Roth opportunity?
Assume self-employed net income of $20,000. Contribute $20,000 to your 401k. Can you still contribute to your Roth IRA or does the 401k deduction eliminate the additional Roth opportunity?
Permalink Submitted by Alan - IRA critic on Thu, 2024-02-22 02:01
No Roth IRA contribution because the 401k contribution will use all of the net earnings from SE.
Permalink Submitted by David Mertz on Thu, 2024-02-22 02:40
… unless the contribution to the 401(k) is an employee Roth contribution, which would be nondeductible, in which case the same compensation that was used to make the Roth contribution to the 401(k) can be used to support a Roth IRA contribution. If the plan permits Roth contributions, only as much as the desired Roth IRA contribution would be needed to be contributed to the designated Roth account and the rest could be made as regular deductible elective deferrals.