Question: Can I still have a traditional IRA if I contribute to my 401(k) plan at work?

Answer :

Yes. Anyone with earned income who is under age 70½ can open and contribute to a traditional IRA. The contribution limit is $5,000 for 2009 and 2010, plus an additional "catch-up" contribution of $1,000 in 2009 and 2010 if you're 50 or older. However, you may not be able to deduct your IRA contributions if you're covered by a 401(k) plan at work. Whether or not you can deduct your IRA contributions depends on your filing status and annual income (adjusted gross income, or AGI). Specifically, for tax year 2010:

If your filing status is:	Your IRA deduction is reduced if your AGI is between:	Your deduction is eliminated if your AGI is:
Single or head of household	$56,000-$66,000	$66,000 or more
Married filing jointly or qualifying widow(er)	$89,000-$109,000	$109,000 or more
Married filing separately	$0-$10,000	$10,000 or more

You may also qualify for a partial tax credit for amounts contributed to your traditional IRA or your 401(k) plan.