What are my retirement combination limits?

Question

My company states that the IRS limits the dollar amount an employee can contribute on a combined standard before-tax and Roth 401(k) basis. For calendar year 2008, the limit is $15,500. I believe that means that both 401k and Roth 401k contributions through my employer are limited to $15,500 for the year.

Can I contribute the maximum $15,500 and the open an IRA and contribute the $5000 maxium there too? The would be a total of $20,500 per year.

Answer 1

It primarily depends on how much you make per year, and your maritial status.  My wife and I contribute the max to our 401k plans (15500 for her, and 20500 for me - I'm 50 this year).  Because of income limits, we are not eligible for a traditional IRA (at least not eligible to deduct contributions for tax purposes), but we both contribute the max (5000 her, 6000 me) to a ROTH IRA.

See the link for limits and how they may affect you.