Counting Against the 15%

Dan just made it to Baby Step 4 and wonders if the money he contributes to his 401(k) counts against the money he can contribute to his Roth IRA.

QUESTION: Dan just made it to Baby Step 4 and wonders if the money he contributes to his 401(k) counts against the money he can contribute to his Roth IRA.

ANSWER: No it does not. You can fully fund a Roth IRA and fully fund a Roth 401(k). They do not step on each other.

I recommend at Baby Step 4 that you don’t put more than 15% of your total income into retirement. Multiply your household income by 0.15 then put that 15% in there. That’s $15,000 per $100,000 of income that is going somewhere into some kind of retirement plan, be it a Roth 401(k), Roth IRA, a 401(k) or something like that.