Roth IRA vs 401(k) for retirement savers in 2026

Contribution limits and catch-ups

On contribution limits, the 401(k) wins: it takes $24,500 of your pay in 2026, more than three times the Roth IRA's $7,500.

• The two limits are separate, so contributing to one never uses room in the other.
• From 2026, a worker whose prior-year FICA wages from that employer topped $150,000 must make 401(k) catch-ups as Roth.
• Some plans allow after-tax contributions above $24,500, and the mega backdoor Roth guide explains how that room works.

Income limits

On income limits, the 401(k) wins again: anyone eligible for the plan can contribute at any income, and the Roth IRA phases out from $153,000 of MAGI for single filers and $242,000 for joint filers.² MAGI is figured after pre-tax 401(k) deferrals, so traditional deferrals can bring a high earner back inside the range, as the $180,000 example below shows. Above the limit, the route in is a backdoor Roth IRA.

Tax treatment and the employer match

On tax treatment, neither account wins outright: a Roth IRA and Roth 401(k) dollars are taxed now and come out tax-free, and traditional 401(k) dollars are deducted now and taxed later. The employer match goes into the pre-tax side by default, so it is taxed when you withdraw it, even if your own deferrals are Roth. Which one saves you more depends on whether your tax rate is higher now or in retirement.

• A plan may offer a Roth match only if its terms say so, so check your plan's summary before you count on one.
• Roth vs traditional IRA works through the break-even math.

Investment choices and fees

On investment choices, the Roth IRA wins: it holds whatever your broker offers, and a 401(k) holds only the funds your employer picked. The plan's menu decides what you can own and what it costs, so check its fund expense ratios before you put more than the match there. See best Roth IRA accounts for where to open one.

Early access to your money

On early access, the Roth IRA wins: your own contributions come out at any time, for any reason, with no tax and no penalty.³ A 401(k) withdrawal before 59½ is taxed and carries a 10% additional tax unless an exception applies.⁴ The Rule of 55, for leaving your job in or after the year you turn 55, is one exception that covers a 401(k) and not an IRA.

• The traditional IRA guide lists every exception.
• Keep an emergency fund outside both accounts, and treat Roth IRA contributions as a backstop, not a plan.

Required minimum distributions

On required minimum distributions, the Roth IRA and the Roth side of a 401(k) now tie: neither requires withdrawals while you are alive, a change that took effect for Roth 401(k) money in 2024.⁵ Pre-tax 401(k) money requires RMDs from 73 if you were born 1951 to 1958 and 75 if born 1960 or later. The age for anyone born in 1959 is not settled in final rules.

• Your plan may let you delay RMDs from your current employer's 401(k) until you retire, unless you own 5% or more of the company.
• This is why rolling a Roth 401(k) into a Roth IRA to avoid RMDs is no longer needed.

Step 1: Contribute enough to get the full 401(k) match

Contributing enough to get the full 401(k) match comes first, because the match adds money no other account can. Find the formula in your plan's summary plan description, for example 50% of what you put in, up to 6% of salary, and set your deferral rate to reach it.

Step 2: Fund a Roth IRA if your income allows

If your income is under the Roth IRA limit, fund a Roth IRA next for the wider fund choice and access to your contributions. You can put in up to $7,500, or $8,600 at 50 or older, and if your 401(k)'s funds are low-cost, you can skip to Step 3. See best Roth IRA accounts to compare where to open one.

Step 3: Go back to the 401(k) up to $24,500

Then go back to the 401(k) and contribute up to $24,500 of your own pay in 2026, including what you put in to get the match. If you are 50 or older, your higher ceiling is in the contribution limits table above.

Step 4: Choose Roth or pre-tax for your 401(k) dollars

Choosing Roth or pre-tax for your 401(k) dollars depends on whether your tax rate is higher now or in retirement. Pre-tax deferrals lower your MAGI, which matters near the Roth IRA limit, and many savers split between the two. Roth vs traditional IRA shows how to find your break-even rate.

Saving $7,500 on a $60,000 salary

Saving $7,500 on a $60,000 salary, the order costs or earns you the $1,800 match.

Skipping the match costs $170,029 by year 30 in this example. The match dollars are pre-tax and taxed on withdrawal, and the table shows balances before that tax.

Saving $15,000 on a $100,000 salary

Saving $15,000 on a $100,000 salary, the order changes the account mix but not the total, because both splits capture the full $3,000 match.

The split buys fund choice and access to $7,500 a year of contributions, not a larger balance.

Saving $24,500 on a $180,000 salary

Saving $24,500 on a $180,000 salary, choosing pre-tax 401(k) deferrals opens room for a Roth IRA that all-Roth deferrals close.

A MAGI of $155,500 sits inside the $153,000 to $168,000 phase-out, which cuts the $7,500 limit to $6,250. With all-Roth deferrals, the route to a Roth IRA is a backdoor Roth IRA. There is no 30-year row here, because the two columns hold different mixes of taxed and untaxed money, and comparing them needs the break-even rate.

Choose a Roth IRA if

• You've already contributed enough to get your full 401(k) match, or your job has no plan.
• You want to pick your own funds, or your plan's funds are expensive.
• You want to be able to take your contributions back out before 59½.
• Your MAGI is under $153,000 single or $242,000 joint, so you can contribute the full $7,500.

Choose a 401(k) if

• Your employer matches what you put in.
• You want to save more than $7,500 a year in a tax-advantaged account.
• Your income is over the Roth IRA limit and your plan offers Roth contributions.
• You want the deduction now, or the lower MAGI that pre-tax deferrals bring.