Hello and welcome back to the Money Girl Podcast.

I'm Laura Adams,

I'm Laura Adams, the author of Money Girls Smart Moves to Grow Rich.

If you're like Bonnie, who emailed me a great question about retirement accounts,

you might wonder if you should contribute to both a retirement plan at work and an IRA.

Here's Bonnie's question.

Right now I'm contributing 10% to my 401k at work, and I'm fortunate that my employer matches half of what I put in

up to 6% of my salary. So that means I get an additional 3% from my company for a total contribution of 13%.

My goal this year is to contribute 20% of my income or $8,000 for retirement.

Should I just increase my 401k contributions?

Or is it better to leave the 401k alone and open up an IRA and contribute the difference

of 7% to it instead.

Bonnie's question about whether to have both a 401k and an IRA is an important one

because there's a little twist in the rules that can make contributing to an employer retirement plan and an IRA in the same year, not such a good idea for some people.

In this podcast, we'll look at when it's a smart move to contribute to both

and when it isn't. If you're a regular Money Girl listener, you already know that an IRA stands

for individual retirement arrangement and it's a special

type of account you can use to safer retirement that offers money saving tax benefits.

In general investing through a taxvantaged account is a smart move because it really stretches

your dollar.

So for you to understand why I'd ever say that contributing to an IRA could be a bad idea?

You need to understand the special rule that I mentioned.

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