 | Can I still have a traditional IRA if I contribute to my 401(k) plan at work?
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Answer:
Yes. Anyone with earned income who is under age 70½ can open and contribute to a traditional IRA. The contribution limit is $5,000 for 2008 and 2009, plus an additional "catch-up" contribution of $1,000 in 2008 and 2009 if you're 50 or older. However, you may not be able to deduct your IRA contributions if you're covered by a 401(k) plan at work. Whether or not you can deduct your IRA contributions depends on your filing status and annual income (adjusted gross income, or AGI). Specifically, for tax year 2009:
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If your filing status is:
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Your IRA deduction is reduced if your AGI is between:
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Your deduction is eliminated if your AGI is:
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Single or head of household
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$55,000-$65,000
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$65,000 or more
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Married filing jointly or qualifying widow(er)
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$89,000-$109,000
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$109,000 or more
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Married filing separately
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$0-$10,000
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$10,000 or more
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You may also qualify for a partial tax credit for amounts contributed to your traditional IRA or your 401(k) plan.
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