Can i contribute $5000 in Roth-IRA and $16,500 in 401K in the same year 2010. or should the total of IRA + 401K not exceed 16,500.
I am a little confused about total limits if I am contributing to both.
i am 26 years old and i make $55,000 annually.
thanks
401K max (under 50) = $16500
Roth IRA max (under 50) = $5000
With a salary of $55000, unless you have other income, it's probably not advised to max out the 401K. You should still invest that much money, if you can afford it. However, you should probably put some into a more liquid investment. with the 401K you will be penalized if you take it out before age 59.5. the Roth has more flexiblity related to withdrawals, but it wouldn't be like individually held stock or mutual funds.
The limits are separate. You just need to insure that your income does not exceed the maximum allowable for Roth IRA contributions (which it doesn't).