Can You Max Out a 401(k) and an IRA? Strategies for Both

Combining a 401(k) from work with an IRA can help you grow savings faster and give you more options for retirement planning. Contributing to both could grow your retirement savings by combining tax-deferred and tax-free advantages. A 401(k) typically provides employer matching, while an IRA offers wider investment flexibility. Together, they support diversification, enhance tax efficiency and add flexibility to how you draw income in retirement. A financial advisor can help you decide how much to put into each account based on your goals and tax situation.

You can contribute to both a 401(k) and an IRA in the same year. In fact, many investors choose to do so as a way to maximize their retirement savings, and financial experts generally recommend taking advantage of both when you have the money to do so.

“If you earn enough to max out your workplace 401(k) and an IRA, it’s a good move,” said Tanza Loudenback, a Certified Financial Planner™ (CFP®). “Both types of accounts are essential for creating a retirement income strategy that’s tax efficient and flexible.”

That said, not everyone will be able to take full advantage of both accounts in the same way. Income limits and workplace plan participation can affect whether your IRA contributions are deductible.

The IRS sets separate contribution limits for each account. This means your deposits in one do not reduce the amount you can put into the other. For 2025, you can contribute up to $23,500 to a 401(k) and $7,000 to an IRA, with additional catch-up contributions allowed if you’re 50 or older.

This distinction matters because the limits are separate, but your ability to deduct IRA contributions may be restricted if you or your spouse are already covered by a workplace plan. And in that case, you may want to look for other alternatives.

“If you’re unable to make tax deductible contributions to a traditional IRA because of your 401(k) participation, check whether a Roth IRA is available to you so you can start filling up a tax-free retirement savings bucket,” Loudenback said.

You should also note that even though you can contribute to both accounts, the tax benefits depend on your income and whether you’re covered by a workplace retirement plan.

With an IRA, your ability to deduct contributions depends on those factors. If you or your spouse have a 401(k), your ability to deduct traditional IRA contributions may be limited once your income passes certain thresholds. In that case, your contributions may be nondeductible, though earnings can still grow tax-deferred until withdrawal. For Roth IRAs, income limits determine whether you can contribute directly at all, regardless of whether you’re covered by a workplace plan.

This does not prevent you from contributing, but it does mean you should compare the after-tax value of those contributions with other options.

Maxing out your 401(k) does not prevent you from contributing to an IRA. The two accounts have completely separate contribution limits under IRS rules. That means even if you’ve put the maximum $23,500 into your 401(k) in 2025 (or $31,000 if you’re 50 or older), you may still contribute up to $7,000 to an IRA (or $8,000 if you qualify for catch-up contributions).

The catch, however, comes in the form of tax treatment. If you or your spouse participate in a workplace retirement plan, such as a 401(k), the ability to deduct your traditional IRA contributions may be reduced or eliminated once your income reaches certain thresholds. In this case, you can still make contributions, but they may not reduce your taxable income for the year.

Still, contributing to both a 401(k) and an IRA can significantly expand your retirement savings potential.

For someone under 50 who maxes out both accounts, that’s a total of $30,500 in annual contributions in 2025, and even more if you’re eligible for catch-up amounts. This layered approach not only builds more retirement wealth, but also helps spread out your tax exposure between pre-tax and potentially tax-free withdrawals later in life.

Balancing contributions between a 401(k) and an IRA is one of the most effective ways to strengthen your retirement plan. Each account type offers unique advantages. As such, the key is deciding how to prioritize contributions in a way that maximizes both tax benefits and long-term growth.

Here are five strategies to consider:

• Diversify across account types. Splitting contributions between pre-tax and after-tax accounts can help you manage future tax uncertainty. With a traditional 401(k) and Roth IRA, you get the option of drawing from both taxable and tax-free buckets in retirement.

• Start with your 401(k) match. If your employer offers matching contributions, contribute enough to your 401(k) to capture the full match before putting money elsewhere. This is essentially “free money” and can give your retirement savings an immediate boost that no IRA investment can match on its own.

• Maximize tax flexibility with an IRA. Once you’ve taken advantage of the 401(k) match, consider contributing to an IRA for added tax flexibility. A Roth IRA allows for tax-free withdrawals in retirement. Meanwhile, traditional IRA can provide tax deductions now—though deductibility may be limited by income if you also have a 401(k).

• Fill in the gaps with extra 401(k) contributions. After funding an IRA, you may want to return to your 401(k) to increase contributions toward the annual limit. This is especially helpful if your 401(k) offers low-cost investment options. You may also find it beneficial if you’re in a high tax bracket and want to defer more taxable income.
• Consider additional savings vehicles. If you’ve maxed out both accounts, think about other tax-advantaged options. Possibilities include an HSA, if you’re eligible, or taxable brokerage accounts for more flexibility.

Maxing out a 401(k) and IRA is not only possible—it can accelerate retirement savings and create tax flexibility for the future. Contribution rules and income limits affect how much value you can get from each account. Many people begin with an employer match in a 401(k), then add an IRA for its tax benefits, or use both together. The order that works best depends on your income, plan access, and retirement goals. A financial advisor can help you weigh these factors and set a funding order that fits your situation.

• A financial advisor can help you determine when is the best time retire and manage other factors to maximize your benefits. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• If you want to diversify your portfolio, here’s a roundup of 13 investments to consider.

Tanza Loudenback, a Certified Financial Planner™ (CFP®), provided the quotes used in this article. Please note that Tanza is not a participant in SmartAsset AMP, is not an employee of SmartAsset and has been compensated. The opinions voiced in the quote(s) are for general information only and are not intended to provide specific advice or recommendations.

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