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Pile up more Roth IRA-type benefits

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in Small Business Tax

Q. I’ve already contributed the maximum amount to a Roth IRA. Can I still contribute to a Roth 401(k) plan this year? C.S., Pawtucket, R.I.

A. Yes. Contributions to a Roth IRA have no effect on the amount of contributions made to a 401(k) plan, whether it’s a Roth 401(k) or a regular 401(k). The dollar limit for elective deferrals to a 401(k) plan for 2006 is $15,000 ($20,000 if you’re age 50 or older). For 2006, you could’ve contributed as much as $4,000 to your Roth IRA ($5,000 if you’re age 50 or older). Between the two, you can contribute up to $19,000 this year (up to $25,000 if you’re age 50 or older). Tip: If you’ve already maxed out on Roth IRA contributions, you can’t contribute to a traditional IRA for 2006.

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