Having Both a Simple IRA and a Roth IRA at the Same Time

Yes, you can have both a straightforward IRA and a Roth IRA, but contribution limits explore across both accounts combined

You can own a straightforward IRA and a Roth IRA at the same time. The IRS does not prohibit holding both. However, the annual contribution limits work together — money you put into one account counts toward your total retirement savings limit for the year, which affects how much you can put into the other.

The reason this matters: a straightforward IRA is typically offered through your employer and funded with pre-tax dollars (or employer contributions). A Roth IRA is an individual account you open yourself, funded with after-tax dollars. They serve different purposes and have different tax treatment, but the IRS treats your total contributions as one pool when calculating what you are allowed to save.

Before you open a Roth IRA while you have a straightforward IRA, you need to understand how the contribution limits interact and whether your income allows you to contribute to a Roth in the first place.

Key Takeaways

You can hold a straightforward IRA and a Roth IRA simultaneously, but contributions to both accounts count toward a single annual limit.
For 2024, the combined contribution limit across both accounts is $16,000 if you are under 50, or $19,500 if you are 50 or older.
Roth IRA contributions are subject to income limits that vary by filing status, and high earners may not be able to contribute directly to a Roth.
Employer contributions to your straightforward IRA do not count toward your personal contribution limit, only your own deferrals do.
If you exceed the combined limit, the IRS charges a 6 percent excise tax on the excess amount each year it remains in the accounts.

How the contribution limit works when you have both accounts

The IRS sets an annual limit on how much you can contribute to retirement accounts in a single year. When you have both a straightforward IRA and a Roth IRA, your contributions to both accounts are added together to determine whether you have stayed within that limit.

For 2024, the combined limit is $16,000 if you are under age 50. If you are 50 or older, you can contribute an additional $3,500 as a catch-up contribution, bringing your total to $19,500. These numbers change each year based on inflation, so check the IRS website or your tax documents for the current year's limit.

Here is how it works in practice: suppose you contribute $10,000 to your straightforward IRA through payroll deductions in 2024. You then have $6,000 remaining in your contribution room for the year. That means you can contribute up to $6,000 to a Roth IRA without exceeding the limit. If you tried to put $8,000 into the Roth, you would be $2,000 over the limit, and the IRS would assess a 6 percent excise tax on that excess amount.

Roth IRA income limits may prevent you from contributing

Even if you have contribution room left after funding your straightforward IRA, you may not be able to contribute to a Roth IRA if your income is too high. The IRS imposes income limits on Roth contributions that depend on your filing status and modified adjusted gross income (MAGI).

For 2024, if you file as single, you can contribute the full amount to a Roth IRA only if your MAGI is below $146,000. The ability to contribute phases out between $146,000 and $161,000. If your MAGI is $161,000 or higher, you cannot contribute to a Roth IRA directly. The income limits are higher if you file as married filing jointly, and different if you file as married filing separately.

Your straightforward IRA income does not reduce your MAGI for Roth purposes — your employer contributions to the straightforward IRA are not counted as income, but your own salary is. So even if your employer is putting money into your straightforward IRA, you still need to check whether your total income allows you to fund a Roth.

Employer contributions to your straightforward IRA do not count toward your limit

One important distinction: your employer's contributions to your straightforward IRA are separate from your personal contribution limit. Only the money you defer from your own paycheck counts toward the $16,000 (or $19,500) annual limit.

Your employer is required to contribute to your straightforward IRA — either a 3 percent match of your salary or a 2 percent non-elective contribution for all employees. These employer contributions do not reduce the amount you can put into a Roth IRA. If your employer contributes $5,000 to your straightforward IRA, you still have the full $16,000 in personal contribution room available for your own deferrals to the straightforward IRA and any Roth IRA contributions combined.

What happens if you exceed the combined limit

If you contribute more than the annual limit across both accounts, the IRS imposes a 6 percent excise tax on the excess amount. This tax applies each year the excess remains in the accounts, so the penalty compounds if you do not fix the problem.

For example, if you contributed $17,000 total to a straightforward IRA and Roth IRA in 2024 when the limit was $16,000, you would owe a 6 percent tax on the $1,000 excess. If you did not withdraw that $1,000 by the tax filing important date, you would owe the 6 percent tax again in 2025, and again in 2026, until the excess is removed.

To correct an excess contribution, you must withdraw the excess amount plus any earnings it generated. The earnings are taxable as income in the year you withdraw them. It is important to catch this mistake early — the longer the excess sits in the account, the more earnings accumulate and the larger your tax bill becomes.

Withdrawals and tax treatment differ between the two accounts

A straightforward IRA and a Roth IRA have different withdrawal rules and tax consequences, which is another reason some people choose to have both. Money you withdraw from a straightforward IRA is taxed as ordinary income in the year you withdraw it. Money you withdraw from a Roth IRA is tax-free if you meet certain conditions (you must be 59½ and have held the account for at least five years).

If you need to withdraw money before age 59½, the straightforward IRA generally charges a 25 percent early withdrawal penalty if you withdraw within the first two years of opening the account, and 10 percent after that. A Roth IRA allows you to withdraw your contributions (not earnings) at any time without penalty, which makes it more flexible for unexpected expenses.

Some people use a Roth IRA as a supplemental savings vehicle alongside a straightforward IRA specifically because of this flexibility. You can contribute to both, keep your straightforward IRA for long-term retirement savings, and use the Roth as a more accessible backup fund if needed.

How to track contributions across both accounts

When you have both accounts, you need to track your contributions carefully to avoid accidentally exceeding the limit. Your straightforward IRA provider will send you a statement showing your deferrals for the year. Your Roth IRA provider will do the same. You are responsible for adding these numbers together and making sure the total does not exceed the annual limit.

If you change employers mid-year, you may have straightforward IRAs at two different companies. Contributions to both are combined for the annual limit calculation. The same applies if you have a straightforward IRA and also contribute to a 401(k) or other workplace retirement plan — all contributions count toward the same limit.

Keep copies of your year-end statements from both accounts. When you file your tax return, you will report your Roth IRA contributions on Form 8606. Your straightforward IRA contributions are reported on your W-2 or in a separate statement from your employer. Having these documents organized makes it much easier to verify you stayed within the limit and to correct any mistakes if the IRS questions your return.

Frequently Asked Questions

Can I move money from my straightforward IRA to a Roth IRA?

Yes, you can convert money from a straightforward IRA to a Roth IRA, but you must wait at least two years after you first participated in the straightforward IRA plan. When you convert, the amount you move is taxed as ordinary income in that year. This can be a large tax bill, so many people convert small amounts over several years to spread the tax impact.

What if my employer does not offer a straightforward IRA anymore?

If your employer closes the straightforward IRA plan, you can roll the balance into a traditional IRA or another employer plan if you move jobs. You can still open and contribute to a Roth IRA separately, as long as your income is within the Roth limits. The contribution limit rules remain the same — your deferrals to any retirement account count toward the combined annual limit.

Does having a straightforward IRA affect my ability to deduct traditional IRA contributions?

Yes. If you have a straightforward IRA and earn income above certain thresholds, you cannot deduct contributions to a traditional IRA. For 2024, if you are covered by a straightforward IRA at work and file as single, you cannot deduct traditional IRA contributions if your income exceeds $77,000. These limits are higher if you file as married filing jointly. A Roth IRA is not affected by this rule — you can contribute to a Roth even if you cannot deduct a traditional IRA contribution.

What if I contribute too much by accident?

Contact both your straightforward IRA and Roth IRA providers when ready and ask them to help you withdraw the excess contribution plus earnings. You will need to file Form 5329 with your tax return to report the excess and calculate the 6 percent excise tax. The sooner you fix it, the less the penalty will cost you, because the excess will not sit in the account generating additional earnings and additional tax years of penalties.

This guide is for general information only and is not medical, financial, legal, or other professional advice. For decisions specific to your situation, consult a qualified professional. See our Editorial Policy.