Can I Do a Roth 401(k) & Roth IRA at the Same Time?

Summary

Episode Summary: Can I Do a Roth 401(k) & Roth IRA at the Same Time?

Podcast: Ramsey Everyday Millionaires
Release Date: August 25, 2025
Hosts: Chris Hogan, George Kamel
Guest: Diane (Caller)

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Overview

This episode centers on clarifying a common question: can an individual contribute to both a Roth 401(k) and a Roth IRA in the same year? Diane from Louisville calls in to settle a debate with her brother on this very topic. The discussion highlights key differences, contribution rules, and strategies for maximizing retirement savings using both Roth account types. The hosts also inject humor and encouragement by referencing the Ramsey Baby Steps and celebrating progress toward wealth-building goals.

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Key Discussion Points & Insights

1. Listener’s Scenario & Main Question

• [00:18 - 01:03]
  • Diane explains her brother earns $100,000/year, contributes $8,000 to a Roth IRA (he’s over 50, so he qualifies for the catch-up contribution), and $7,000/year to his 401(k) with a Roth option.
  • The point of debate: Can he use both a Roth 401(k) and a Roth IRA, or is it one or the other?

2. Clarifying Roth Accounts: Contributions & Tax Treatment

• [01:03 - 01:17]
  • Chris Hogan: “Roth is just a tax treatment on the account... you can max out a Roth IRA, and you can max out a Roth 401K.”
  • Roth accounts use after-tax dollars; withdrawals are tax-free in retirement, as long as rules are met.

3. The Answer: Yes, You Can Do Both

• [01:13 – 01:33]
  • Chris Hogan confirms: “You can do a Roth IRA and a Roth 401K.”
  • The confusion often arises due to terminology and overlapping concepts, especially between traditional and Roth versions, as well as between IRAs and 401(k)s.

4. Income Limits & Workarounds

• [01:57 – 02:35]
  • There are income limits for Roth IRA contributions, but not for Roth 401(k) contributions.
  • Chris Hogan: “He can always do a backdoor Roth IRA if he doesn’t qualify for that [due to income].”
  • The ability to use both accounts hinges on these eligibility requirements, but most people can take advantage of both in some manner.

5. Practical Investing Advice & Ramsey Steps

• [02:44 – 02:59]
  • Chris Hogan: “You could do all 15% in Baby Step 4 in a Roth 401K...and not touch the Roth IRA. But... you can always utilize that Roth IRA.”
  • Roth 401(k)s are tied to an employer; Roth IRAs are independently managed.
• Emphasizes the flexibility individuals have in structuring their retirement contributions based on employer plan quality and personal preference.

6. Encouragement, Humor, and Ramsey Culture

• [01:33 – 01:59, 02:35 – 02:51]
  • Playful banter about sibling rivalry and trusting financially savvy family members.
  • Diane is congratulated for reaching Baby Step 7 (paid-off home, full investing), serving as a model for listeners.
  • George jokes: “The meta here is listen to your sister.”
  • Chris and George underscore the value of learning from those further along in their financial journey.

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Notable Quotes & Memorable Moments

• Chris Hogan [01:03]:
  “I think we got to stop thinking. You guys, like the Little Engine that could, like, I think. I can't just. I mean, you could have Googled this and settled it. You can do a Roth IRA and a Roth 401K.”
• Chris Hogan [01:17]:
  “A Roth is just a tax treatment on the account... you can max out a Roth IRA, and you can max out a Roth 401K.”
• Diane [01:33] (light-hearted):
  “Oh, my gosh, George, you're my favorite, because that means I'm right.”
• Chris Hogan [02:35]:
  “I love a Roth account because you're investing with after tax dollars, which means Uncle Sam got his cut now he ain't taking it later.”
• George Kamel [02:36]:
  “The meta here is listen to your sister.”
• Chris Hogan [02:44]:
  “Especially when she's in baby step seven with a paid for home. Like I'll just do what she's doing. What could go wrong?”

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Timestamps for Key Segments

• [00:18 – 01:03]: Diane describes the scenario and sibling dispute.
• [01:03 – 01:17]: Chris explains tax treatment and confirms you can have both accounts.
• [01:57 – 02:35]: Clarifies income limits, backdoor Roth, and recaps main points.
• [02:44 – 02:59]: Summarizes practical options with Roth accounts and Ramsey plan advice.

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Takeaways for Listeners

• Yes, you can contribute to both a Roth 401(k) and Roth IRA in the same year, within their respective annual limits and subject to Roth IRA income limits.
• If your income exceeds the Roth IRA threshold, the "backdoor Roth" method may still allow contributions.
• Consider employer plan quality: You can opt to put the full recommended 15% towards a Roth 401(k) if options are strong, or utilize both accounts for flexibility.
• Trust the advice of those further along in their financial journey—and sometimes, your sibling is right!

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Podcast Tone

Upbeat, practical, and supportive, the episode blends financial expertise with humor and approachability, reinforcing Ramsey-style steps to wealth and inviting listeners to learn alongside ordinary-but-determined callers.

Transcript

[Diane]

Foreign.

[Chris Hogan]

This episode is brought to you by SmartVestor. Connect with an investing pro near you at RamseySolutions.com SmartVestor Diane is up next in Louisville, Kentucky. What's going on, Diane? How can we help today?

[Diane]

Hi, guys. Thanks so much to the whole Ramsey team for everything you guys do. Oh, my brother and I have a dispute.

[George Kamel]

Nice. We'll settle it.

[Diane]

So I think he can do his Roth 401K and a Roth IRA, and he tells me he can only do a Roth IRA, and I have all his numbers, so he makes 100,000 a year. He does 8,000 in his Roth IRA every year because he's over 50. His birthday is tomorrow, and he does 7,000 a year in his 401K. But he does have a Roth option.

[Chris Hogan]

Okay, and what's the debate?

[Diane]

I think he needs to do the Roth 401k, but he's telling me he can't because he already does the 8,000 a year.

[Chris Hogan]

I think we got to stop thinking. You guys, like the Little Engine that could, like, I think. I can't just. I mean, you could have Googled this and settled it. You can do a Roth IRA and a Roth 401K.

[Diane]

Yes, but then in the verbiage, it said. It just kept saying 401 and not Roth.

[Chris Hogan]

Okay, so there's a Roth is just a tax treatment on the account you're using after tax dollars, you're investing, and it's not taxed again when you withdraw as long as you're of retirement age. And so you can max out a Roth IRA, and you can max out a Roth 401K.

[Diane]

Oh, my gosh, George, you're my favorite, because that means I'm right.

[Chris Hogan]

That's what I was hoping for. I was like, I hope Diane's on the right side of history. I hope she doesn't hate me. Give me a chance.

[George Kamel]

Is there something like that your parents did that was mean that I can settle? I'm just kidding.

[Chris Hogan]

John needs a win.

[George Kamel]

I'm just kidding.

[Diane]

No, but I have to tell you, I'm on Baby step seven. And, Chris, you got to pay off your mortgage, dude.

[Chris Hogan]

Yes, thanks. She's referring back to a previous caller.

[George Kamel]

Exactly. Good.

[Diane]

I love it.

[Chris Hogan]

Way to go, Diane. Yeah, you are correct on this one. And it's a good. You know what? It's. It is very confusing. And so I will give him that. That you're like, wait, Roth. There's a traditional Roth and there's an IRA, but there's a 401K. One is through the employee. So it is a little bit messy. But to be clear, you can invest in both. Now there are income limits for an ira, but he can always do a backdoor Roth IRA if he doesn't qualify for that. And so that's the only caveat to all of this. But either way, you can do Roth all the way on every type of account. And I love a Roth account because you're investing with after tax dollars, which means Uncle Sam got his cut now he ain't taking it later.

[George Kamel]

And the, the meta here is listen to your sister.

[Chris Hogan]

That's really the underlying question to listen to our sister. Why would you question your sister? I don't know.

[George Kamel]

Especially when she's holding Google.

[Chris Hogan]

Especially when she's in baby step seven with a paid for home. Like I'll just do what she's doing. What could go wrong?

[George Kamel]

I didn't think about that. That's why cu your millionaire older sister like here's what you need to do and you have to be like nuh, I love. I get that.

[Chris Hogan]

Yeah. And actually you know what's cool is you could do all 15% in baby step 4 in a Roth 401K. If you have good options through your employer, you could do it all right there and not touch the Roth ira. But it's, you know, you can always utilize that Roth ira. It's, they're very similar tools in that regard. Just one is connected through your employer and one is outside of your employer. Great question. Thanks for tuning in to Ramsey Everyday millionaires. Need help with your investments? Connect with a Smartvestor pro at ramseysolutions. Com Smartvestor or click the link in the show notes. Ramsey Solutions is a paid non client promoter of participating pros. Learn more at ramseysolutions. Com Smartvestor.