Can I have both a 401(k) and Roth IRA?

Yes. You can contribute to both. Many investors max their 401(k) match, then fund a Roth IRA for tax diversification and flexibility.

What if I earn too much for a Roth IRA?

Use a backdoor Roth: contribute to a Traditional IRA (non-deductible) and convert to Roth. No income limit on conversions. Consult a tax pro for your situation.

When can I withdraw from a Roth IRA?

Contributions can be withdrawn anytime. Earnings are tax-free after 59½ if the account is 5+ years old. Exceptions exist for first-time home purchase, disability, etc.

Roth IRA: Complete Guide to Tax-Free Retirement | Investors Lab

What Is a Roth IRA?

A Roth IRA is an individual retirement account where you contribute after-tax money. Growth and qualified withdrawals in retirement are tax-free. You never pay taxes on the gains.

Key Benefits

Tax-free withdrawals in retirement.
No RMDs (required minimum distributions) during your lifetime—you can leave it to grow.
Flexibility: Withdraw contributions (not gains) anytime, penalty-free.
Tax diversification: Having both pre-tax (401k) and Roth gives you options in retirement.

Contribution Limits (2024)

$7,000 per year ($8,000 if 50+)
Income limits: Phase-out starts around $146k (single) and $230k (married filing jointly)
Backdoor Roth: If over the limit, contribute to Traditional IRA (non-deductible) and convert to Roth

Roth vs. Traditional IRA

Roth: Pay tax now, never again. Best when you expect higher taxes in retirement.
Traditional: Deduct now, pay tax on withdrawal. Best when you're in a high bracket now.

Young investors often prefer Roth—they're in lower brackets now and have decades of tax-free growth ahead.