You can use both, but deductibility is a separate test
This article covers U.S. federal tax rules for U.S. citizens and U.S. tax residents using a regular U.S. 401(k) and IRA. Simply owning U.S. stocks while living in Japan does not establish eligibility. State taxes, dual residence and treaty treatment require separate review.
IRS guidance on IRA contributions confirms that workplace-plan participation does not itself prevent IRA contributions. Eligibility to contribute, eligibility for a deduction and eligibility for direct Roth IRA contributions are different tests. An IRA generally requires qualifying taxable compensation; joint filers may qualify using a spouse’s compensation.
2026 limits do not multiply with the number of accounts
The following amounts come from IRS Notice 2025-67 (2026 limits, pages 1–4). Age means the age attained during the year, and catch-ups within a single employer’s 401(k) require plan support. Separate treatment can apply when participating in plans of multiple unrelated employers; confirm this with the administrator. All amounts are U.S. dollars.
| Age | Employee 401(k) elective deferrals | Combined regular IRA contributions | Combined employee contributions |
|---|---|---|---|
| Under 50 | $24,500 | $7,500 | $32,000 |
| 50–59 and 64+ | $32,500 ($8,000 catch-up) | $8,600 ($1,100 catch-up) | $41,100 |
| 60–63 | $35,750 ($11,250 catch-up) | $8,600 | $44,350 |
IRS 401(k) limit guidance treats pre-tax and Roth elective deferrals as one employee limit. Changing jobs and joining two 401(k) plans does not provide $24,500 at each employer. Employer contributions do not use the employee deferral limit, but annual additions within plans of one employer and related employers are limited to the lesser of 100% of compensation or $72,000. Eligible catch-up contributions are outside that annual-additions limit.
The IRA limit combines all traditional and Roth IRAs and is lower if qualifying compensation is lower. For example, an under-50 saver who makes a $3,000 regular traditional IRA contribution has at most $4,500 left for a Roth IRA, subject also to Roth income eligibility. This IRA limit is separate from the 401(k) limit.
Income that reduces a deduction versus a Roth contribution
These main modified adjusted gross income (MAGI) phase-out ranges follow the IRS 2026 announcement, published November 13, 2025. For traditional IRAs, the deduction shrinks; for Roth IRAs, the permitted direct contribution shrinks. At or above the upper boundary, the relevant deduction or direct contribution is unavailable.
| Account and filing situation | 2026 phase-out range |
|---|---|
| Traditional IRA: single, contributor covered at work | $81,000–$91,000 |
| Traditional IRA: joint return, contributor covered at work | $129,000–$149,000 |
| Traditional IRA: joint return, only spouse covered at work | $242,000–$252,000 |
| Roth IRA: single or head of household | $153,000–$168,000 |
| Roth IRA: married filing jointly | $242,000–$252,000 |
If neither spouse is covered at work, the workplace-related income phase-out for a traditional IRA deduction does not apply. Married-filing-separately treatment depends on circumstances including whether the spouses lived together; the joint-return rows cannot be substituted. A nondeductible contribution must not be treated as fully deductible without keeping the appropriate records.
Hypothetical example: a 40-year-old single filer participates in a workplace 401(k), has MAGI of $100,000 and sufficient qualifying compensation. The income test eliminates the traditional IRA deduction. The Roth IRA income phase-out has not started, so a $7,500 direct contribution is possible if there are no other regular IRA contributions.
Compare matching, costs and cash needs before setting priorities
IRS vesting guidance distinguishes employee contributions, which belong to the employee, from employer contributions that may depend on the plan’s vesting terms. Describing matching as a guaranteed 100% investment return leaves out holding periods, forfeiture on departure and market losses.
| Situation | What to compare |
|---|---|
| Employer matching is available | Formula, payroll-period requirements, year-end true-up and service needed for vesting |
| Workplace investments cost more | Compare total IRA account and investment costs while accounting for matching terms |
| A large near-term expense is expected | Check available cash and withdrawal conditions before committing retirement money |
| Comparing a deduction now with future tax-free withdrawals | Model current and withdrawal-year tax rates, deduction eligibility and state taxes |
Hypothetical example: salary is $80,000 and the plan matches contributions dollar for dollar up to 4% of salary. If the employee contributes $3,200 and satisfies all conditions, the employer adds $3,200, for $6,400 in contributions. This is contribution arithmetic, not a guarantee of investment value or the amount transferable on leaving employment.
Documents to gather before contributing
IRS guidance on workplace Roth accounts sets conditions for qualified distributions before earnings can also be withdrawn tax-free. Roth does not mean every dollar is always accessible tax-free. Review the 401(k) plan documents and IRA account terms separately.
- Total current-year elective deferrals across employers and regular contributions across all IRAs.
- Confirm filing status, MAGI and whether either spouse is covered by a workplace plan.
- Compare matching and vesting terms, account and investment fees, and withdrawal conditions.
- If there are nondeductible contributions or rollovers, confirm tax reporting and balance records with a U.S. tax professional.
Investments inside retirement accounts can fall in value. Using every available dollar of contribution room is a different decision from setting an affordable household contribution.
For additional workplace after-tax contributions, see mega backdoor Roth plan requirements and remaining-room calculations.
This is general information. Consult a U.S. tax professional about your individual circumstances. Investment disclaimer
References
6- Notice 2025-67, 2026 limits, pages 1–5 (opens in a new tab) IRS · 2026 tax year · checked 2026-09-07
- 2026 contribution and income limits; November 13, 2025 (opens in a new tab) IRS · checked 2026-09-07
- IRA contribution limits: 2026, workplace coverage and spousal IRAs (opens in a new tab) IRS · checked 2026-09-07
- 401(k) and profit-sharing plan contribution limits: 2026 (opens in a new tab) IRS · checked 2026-09-07
- Retirement topics: Vesting (opens in a new tab) IRS · checked 2026-09-07
- Roth account in your retirement plan: Qualified distributions (opens in a new tab) IRS · checked 2026-09-07
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