Can I invest in an IRA?

Question

I am already enrolled into 401K plan sponsored by employer. Can I also invest in roth or traditional IRA in addition to 401K?

Answer 1

You can invest in either type of IRA.  But you cant deduct your contributions from a Traditional since you are in a 401K.

Limit if Covered by Employer Plan

As discussed earlier, the deduction you can take for contributions made to your traditional IRA depends on whether you or your spouse was covered for any part of the year by an employer retirement plan. Your deduction is also affected by how much income you had and by your filing status. Your deduction may also be affected by social security benefits you received.

Reduced or no deduction.   If either you or your spouse was covered by an employer retirement plan, you may be entitled to only a partial (reduced) deduction or no deduction at all, depending on your income and your filing status.

Answer 2

Yes.   i've done the same for the past 5 years. I went for the ROTH!

Answer 3

sure.  ira's were intended to supplement employer plans like 401k's.

jeff isn't necessarily correct about the deductibility issue: you can still deduct your contribution to a traditional ira if your income is low enough to qualify.

but a roth ira might be a better chouce anyway.

Answer 4

Yes, I set them up for my clients all the time. There are also other retirement vehicles you can use. GRAT's, etc.

Answer 5

Yes you can,  even if your employer has a 401k plan set up, you can always create  your own IRA.  In fact it is a very wise move to do so.