401(k) vs Roth IRA

A 401(k) and a Roth IRA are both accounts, not investments. The account decides the tax wrapper and the rules. The fund inside decides what you own. This page is a general map of those rules for U.S. workers in 2026. It is not a tax opinion and not a recommendation to use either account.

The short contrast

The match comes before the debate

If an employer matches deferrals, the match is part of pay. Leaving it unclaimed is a pay cut. That is true whether the next dollar after the match belongs in a Roth IRA, more traditional 401(k), or more Roth 401(k). The account-order guide puts the match first for that reason, and then lists the reasons the rest of the order moves.

Traditional versus Roth is a tax-rate guess

A traditional contribution skips income tax now and pays it later, at whatever ordinary rates apply to the withdrawal. A Roth contribution pays the tax now. Later qualified withdrawals, including growth, are not taxed.

If your marginal rate in the year you contribute is higher than the rate you expect on withdrawals, traditional treatment saves more tax on paper. If you expect the later rate to be higher, Roth treatment saves more on paper. The guess includes future law, pensions, Social Security taxation, and whether you will still be working. Nobody on a website knows that rate for you.

People also care about things a rate comparison misses: Roth accounts do not give you a deduction to manage a tax bracket this year, and traditional balances can raise required withdrawals later. Under the SECURE 2.0 Act, designated Roth accounts in a workplace plan are not subject to required minimum distributions during the original owner's life, starting with distributions for 2024. Roth IRAs already worked that way. Heirs still have their own rules.

2026 limits worth having on one page

• Employee deferrals, traditional and Roth combined, in a 401(k), 403(b), governmental 457(b), or TSP: $24,500.
• Catch-up at age 50 and older: $8,000. Ages 60, 61, 62, and 63: $11,250 if the plan allows it.
• Starting in 2026, catch-up contributions for a worker whose prior-year Social Security wages from that employer were over $150,000 generally have to be Roth catch-up contributions. The base deferral can still be traditional. Plans were given room to implement this in good faith. Check with payroll.
• IRA contributions, traditional or Roth combined: $7,500, plus $1,100 at age 50 and older.
• Roth IRA phase-out: $153,000–$168,000 single or head of household; $242,000–$252,000 married filing jointly; $0–$10,000 married filing separately if you lived with your spouse.
• The overall defined-contribution additions limit under section 415(c) is $72,000 for 2026, before the age-50 catch-up, which is counted separately. That ceiling is what makes after-tax contributions and a so-called mega backdoor Roth possible in plans that allow both steps. Many plans allow neither.

When a Roth IRA is awkward

Above the phase-out you cannot make a direct Roth IRA contribution. A workplace Roth 401(k) has no income phase-out on the deferral itself. Some households use a backdoor Roth IRA (a non-deductible traditional IRA contribution followed by a conversion). The pro-rata rule can tax the conversion when you already hold pre-tax IRA money. That is a tax-preparation problem, not a slogan. If it applies to you, a preparer or the IRS instructions are the source, not this paragraph.

Limits above are for 2026 and come from IRS IR-2025-111. They change. This comparison is general education, not a reason to open, roll over, or skip an account.