Determining Your Retirement
Account Contribution Order
The order in which you make contributions to a 401(k) and a Roth IRA or Traditional IRA can help you meet your retirement savings goals and provide greater financial flexibility once you retire.
Your priority should be to save 15% or more of your annual income (including any employer contributions) and to direct those retirement dollars into the account where they can produce the most retirement income. If your workplace retirement plan offers an employer matching contribution, your first savings dollars should be directed to your plan to receive the matching contributions. But most employers only match part of what you contribute. So where should you direct your remaining contributions?
Answering the questions below can help you choose the best contribution order for your situation.
1To make nondeductible contributions to a Traditional IRA, there are no income limits. However, if you and/or your spouse participate in an employer-sponsored retirement plan, the amount of the deductible contributions will depend on your modified AGI.
2All individuals are eligible to make designated Roth contributions within a 401(k) if offered by their employers—there are no income limitations.