Can You Max Out Both a 401(k) and Roth IRA?

Here's some great news: yes, you can absolutely max out both a 401(k) and a Roth IRA in the same year. They're completely separate accounts with separate contribution limits. Doing so is one of the most effective retirement savings strategies available, and if you can afford it, it's worth pursuing.

Let's break down the 2025 limits, the income restrictions you need to know about, and the strategies that make this work for high earners.

2025 Contribution Limits: The Numbers

For 2025, here's how much you can put into each account:

401(k) Limits

• Employee contribution: $23,500 (under age 50)
• Catch-up contribution (age 50+): Additional $7,500, for a total of $31,000
• Total limit including employer match: $70,000

Roth IRA Limits

• Annual contribution: $7,000 (under age 50)
• Catch-up contribution (age 50+): Additional $1,000, for a total of $8,000

Combined Maximum

If you're under 50 and max out both, you're putting away $30,500 per year in tax-advantaged retirement accounts ($23,500 + $7,000). If you're 50 or older, that jumps to $39,000 ($31,000 + $8,000). Add employer matching on top, and the total grows even larger.

On a $120,000 salary, $30,500 represents about 25% of your gross income - right in line with aggressive but achievable savings rates.

The Income Limit Problem

Here's the catch: the Roth IRA has income limits. For 2025:

• Single filers: Full contribution allowed if MAGI is under $150,000. Reduced between $150,000-$165,000. Not allowed above $165,000.
• Married filing jointly: Full contribution allowed if MAGI is under $236,000. Reduced between $236,000-$246,000. Not allowed above $246,000.

If you earn too much, you can't make direct Roth IRA contributions. But there's a well-known workaround.

The Backdoor Roth IRA Strategy

The "backdoor Roth" allows high earners to fund a Roth IRA regardless of income. Here's how it works:

1. Contribute to a Traditional IRA. There's no income limit on Traditional IRA contributions (though the tax deduction may be limited). Put in $7,000.
2. Convert to a Roth IRA. There's no income limit on Roth conversions. Move the money from your Traditional IRA to your Roth IRA.
3. Pay taxes on any gains. If you convert quickly (within days), there's minimal or no gain to be taxed on, since the contribution was after-tax and there was little time for growth.

This strategy is legal and widely used. The IRS has never challenged it, and financial institutions like Fidelity and Vanguard make the process straightforward. However, be aware of the pro-rata rule: if you have existing pre-tax money in any Traditional IRA, the conversion will be partially taxable. The cleanest approach is to have zero pre-tax IRA balances before doing a backdoor Roth.

The Mega Backdoor Roth (For the Ultra Aggressive)

If maxing both a 401(k) and Roth IRA still isn't enough, some 401(k) plans allow a "mega backdoor Roth," which can supercharge your savings:

Remember that the total 401(k) limit (employee + employer) is $70,000 in 2025. If you contribute $23,500 and your employer matches $10,000, there's still $36,500 of room. Some plans allow you to make after-tax (non-Roth) contributions to fill that gap, then immediately convert those to Roth.

Not all plans offer this feature - you need to check if your plan allows after-tax contributions and in-plan Roth conversions. But if yours does, you could potentially put $70,000+ into tax-advantaged accounts in a single year ($70,000 in the 401(k) + $7,000 in a Roth IRA).

Why This Strategy Is So Powerful

Maxing both accounts gives you significant advantages:

Tax Diversification

A pre-tax 401(k) gives you a tax deduction today. A Roth IRA gives you tax-free income in retirement. Having both lets you control your tax bracket in retirement by choosing how much to withdraw from each account type.

More Money Compounding

The more you can put into tax-advantaged accounts, the more grows without annual tax drag. In a taxable brokerage account, you owe taxes on dividends and capital gains each year. In a 401(k) or Roth IRA, everything compounds without interruption.

The Numbers Add Up Fast

Let's see what maxing both looks like over time at 7% annual returns:

• After 10 years: approximately $434,000 in your 401(k) + $97,000 in your Roth IRA = $531,000
• After 20 years: approximately $1,020,000 + $290,000 = $1,310,000
• After 30 years: approximately $2,220,000 + $661,000 = $2,881,000

Nearly $3 million in retirement savings over a 30-year career, from maxing out two accounts. And a good chunk of that (the Roth portion) will be completely tax-free in retirement.

Model Your 401(k) Growth

Use the calculator below to see how maxing out your 401(k) projects over time. Set your contribution to reflect the annual maximum and see the long-term impact.

Can You Actually Afford to Max Both?

Let's be realistic. Contributing $30,500 per year requires some financial capacity. On a $100,000 salary, that's over 30% of your gross income. Here's what it looks like in practice:

• 401(k): $23,500 / 26 paychecks = $904 per biweekly paycheck (pre-tax, so your take-home reduction is less)
• Roth IRA: $7,000 / 12 months = $583 per month (from after-tax dollars)

For many people, especially those early in their careers or in high-cost areas, maxing both accounts isn't feasible. And that's okay. Here's a priority order:

1. 401(k) up to the employer match. This is always step one. Free money.
2. Max out Roth IRA ($7,000). The tax-free growth and withdrawal flexibility make this a great next step.
3. Increase 401(k) toward the max. Work your way up to $23,500 as your income allows.
4. Taxable brokerage account. Once both are maxed, invest additional savings here.

Strategies for Making It Work

If maxing both feels like a stretch, here are some ways to get closer:

• Automate everything. Set up automatic 401(k) deductions and automatic Roth IRA transfers on payday. Money you never see is money you don't miss.
• Front-load your Roth IRA. If you get a bonus or tax refund, use it to fund your Roth IRA early in the year. This gives your money more time to grow.
• Use raises strategically. When your income goes up, direct the increase toward retirement rather than lifestyle inflation.
• Track your progress. Review your contribution rates quarterly. Small, consistent increases add up.

What About Roth 401(k)?

If your employer offers a Roth 401(k) option, you can make all $23,500 of your contributions as Roth. In that case, do you still need a separate Roth IRA?

Generally, yes. A Roth IRA offers benefits that a Roth 401(k) doesn't:

• No Required Minimum Distributions. Roth 401(k) accounts are subject to RMDs starting at age 73. Roth IRAs have no RMDs during the original owner's lifetime.
• More investment options. A Roth IRA at a brokerage gives you access to virtually any fund or stock. A Roth 401(k) is limited to your plan's menu.
• Contribution withdrawal flexibility. You can withdraw Roth IRA contributions at any time, penalty-free. Roth 401(k) withdrawals before 59.5 are more restricted.

Tip: You can always roll your Roth 401(k) into a Roth IRA when you leave your employer, which eliminates the RMD issue.

The Bottom Line

Maxing out both a 401(k) and Roth IRA is one of the most effective paths to a secure retirement. The combined $30,500 in annual contributions, growing tax-advantaged for decades, can build serious wealth. If you can't max both right now, prioritize the employer match first, then the Roth IRA, then work up toward the 401(k) max. The goal isn't perfection today - it's consistent progress every year.