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

Yes, absolutely. You can contribute to both a 401(k) and an IRA in the same year. The only limitation is that if you have a 401(k) and your income exceeds certain thresholds ($83,000 single / $136,000 married filing jointly in 2025), your Traditional IRA contribution may not be tax-deductible. However, you can always contribute to a Roth IRA if your income is under the Roth limit.

What happens to my 401(k) if I leave my job?

You have four options: (1) Leave it with your former employer's plan, (2) Roll it over to your new employer's 401(k), (3) Roll it into a Traditional IRA (most flexibility), or (4) Cash it out (worst option — subject to income tax plus 10% penalty if under 59.5). Rolling to an IRA is usually the best choice for investment flexibility and lower fees.

How much should I contribute to my 401(k)?

At minimum, contribute enough to get your full employer match. Ideally, aim for 15-20% of your gross income across all retirement accounts. If you start at 25 and consistently save 15%, you are likely on track for a comfortable retirement. If starting later, you may need to save 20-25% to catch up.

What is a Roth 401(k) and should I use it?

A Roth 401(k) combines the higher contribution limit of a 401(k) ($23,500) with the tax-free withdrawal benefit of a Roth IRA. You contribute after-tax dollars, but all growth and withdrawals in retirement are tax-free. If your employer offers it, consider splitting contributions: 50% Traditional (for current tax savings) and 50% Roth (for tax-free income later). This provides tax diversification in retirement.

401(k) vs IRA in 2025: Which Retirement Account Is Better?

kuldeepparjapati1211 Published: April 12, 2026 3 min read Retirement

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401(k) vs IRA in 2025: Which Retirement Account Is Better?

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