How much can I contribute to my plan?
Because of the tax advantages of retirement accounts, the government puts limits on how much you can contribute to them in a single year. This amount differs depending on the type of account, and changes from year to year, so it’s important to stay aware of the current contribution limits.
Contribution limits for 2020
In 2020, the contribution limit for IRAs and Roth IRAs is $6,000, or $7,000 if you are 50 or older.
For 401(k) and 403(b) plans, the maximum is $19,500. However, if you are 50 or older, you can make up to $6,500 in “catch-up” contributions in addition to the standard $19,500 limit, for a total limit of $26,000.
Can I have a 401(k) and contribute to an IRA?
You can contribute to both types of accounts–your employer-sponsored retirement plan, like a 401(k), and an IRA, like Icon.
Generally, contribution limits are based on the total amount you contribute to retirement accounts. If you have multiple retirement accounts, you can’t max out your contributions in each one.
Instead, you can either hit the limit in a single account and not contribute to others, or contribute a little in each so as to remain within the limit.