401(k) vs Roth IRA 2026
$24,500 vs $7,500 in 2026 IRS limits. Ages 60-63 get a special $11,250 catch-up. Roth IRA phases out at $153K-$168K single. The match → Roth → 401(k) order most experts recommend.
Quick Answer
- 2026 limits: 401(k) $24,500 employee / $72,000 with employer; Roth IRA $7,500.
- Age 50+ catch-up: +$8,000 in 401(k), +$1,100 in Roth IRA.
- Ages 60-63 enhanced catch-up:+$11,250 in 401(k) (SECURE 2.0). Doesn't apply to Roth IRA.
- Roth IRA income phase-out 2026: $153K–$168K single, $242K–$252K married. Above? Use Backdoor Roth IRA.
- The order most experts recommend: 401(k) up to employer match → max Roth IRA → back to 401(k) → HSA → taxable.
- Employer match goes Traditional: even if you contribute to Roth 401(k), the employer match goes pre-tax.
- Roth wins on flexibility: no RMDs, contributions withdrawable anytime tax-free, tax diversification.
All 4 Account Types Compared
| Feature | Traditional 401(k) | Roth IRA | Roth 401(k) | Traditional IRA |
|---|---|---|---|---|
| 2026 contribution limit (under 50) | $24,500 employee / $72,000 incl. employerBest | $7,500 | $24,500 employee | $7,500 |
| Catch-up at age 50+ (2026) | +$8,000 ($32,500 total) | +$1,100 ($8,600 total) | +$8,000 ($32,500 total) | +$1,100 ($8,600 total) |
| Enhanced catch-up ages 60-63 (SECURE 2.0) | +$11,250 ($35,750 total)Best | Not available | +$11,250 ($35,750 total) | Not available |
| Income limits to contribute | None | Phase-out $153K-$168K single / $242K-$252K married | None | Same as Traditional IRA limits but deduction varies |
| Tax treatment | Pre-tax (lowers current taxable income) | After-tax (tax-free in retirement) | After-tax (tax-free in retirement) | Pre-tax (deduction may be limited if covered by employer plan) |
| Employer match available | Yes — typically 3-6% of salaryBest | No | Yes (treated as pre-tax match in separate account) | No |
| Required Minimum Distributions (RMDs) | Yes at age 73 (75 starting 2033) | No (Roth IRAs exempt) | Yes at 73 (changed by SECURE 2.0) | Yes at 73 |
The Standard Order (Match → Roth → 401(k))
Most retirement-planning experts agree on this contribution priority. The order maximizes employer-match capture, then prioritizes the tax-free + flexibility benefits of Roth, then maxes pre-tax 401(k) before less-efficient taxable accounts.
- 1
401(k) contribution up to employer match
If your employer matches 50% on first 6% of salary (typical), contribute 6% minimum. This is a guaranteed 50% return — never leave free money. Even if you can only afford 6%, do this first.
- 2
Max Roth IRA ($7,500 in 2026)
If under income limits ($153K-$168K single phase-out), max it. Tax-free growth + tax-free withdrawals + no RMDs + contribution withdrawal flexibility = Roth's structural advantages over 401(k).
- 3
Back to 401(k) up to limit ($24,500)
Continue 401(k) contributions toward the $24,500 limit. Pre-tax deduction lowers current taxable income.
- 4
HSA if eligible (triple tax advantage)
If you have an HDHP-eligible health plan, HSA gives pre-tax contribution + tax-free growth + tax-free medical withdrawals. The single most tax-efficient account in the US tax code.
- 5
Taxable brokerage (after maxing all above)
Use index funds (FZROX, VTI, FXAIX) for long-term-capital-gains tax efficiency. Final layer after maxing tax-advantaged options.
Worked Example: Income $80K, Employer Matches 50% on First 6%
Optimal contribution strategy for $80,000 salary, age 30, no kids:
- Step 1: $4,800 to 401(k) (6% to capture full employer match)
- Step 1 result: +$2,400/yr employer match (free money)
- Step 2: $7,500 to Roth IRA (under $153K income, full contribution allowed)
- Step 3 (if budget allows): keep adding to 401(k) up to $24,500/yr cap
- Total invested year 1 (Steps 1+2): $12,300 personal + $2,400 employer = $14,700
- Effective savings rate: 18% of salary (15% personal + 3% employer match)
Which account should you prioritize this year?
Match your situation:
- You're not capturing your full employer match→ 401(k) up to match — STOP READING and fix thisEmployer match is 50-100% guaranteed return. Never leave on the table. This is the single most important step.
- Income under Roth IRA limits + match captured→ Max Roth IRA ($7,500)Tax-free growth + flexibility. Best account for most working-age contributors.
- Income above Roth IRA limits ($168K+ single)→ Backdoor Roth IRA (contribute Traditional, convert to Roth)Standard high-income workaround. Watch the pro-rata rule if you have other Traditional IRA balances.
- Self-employed / no 401(k) access→ Solo 401(k) ($24,500 employee + 25% of business income employer side)Solo 401k can shelter $73,500 total in 2026 for self-employed earners.
- Age 50+ trying to catch up→ 401(k) catch-up ($8K extra) + Roth IRA catch-up ($1,100 extra)$32,500 + $8,600 = $41,100/yr possible at age 50+. Major late-stage accumulation opportunity.
- Age 60-63 (SECURE 2.0 enhanced catch-up window)→ 401(k) enhanced catch-up ($11,250 instead of $8,000)Limited window age 60-63. After 63, drops back to $8,000. Use it.
- You've maxed both 401(k) + Roth IRA→ HSA (if HDHP eligible) → taxable brokerageHSA's triple tax advantage beats taxable. Use it before regular brokerage.
Frequently Asked Questions
How we verified this
Contribution limits and income phase-outs verified May 2026 against IRS direct disclosure (Notice 2025-79 + IRS press release Nov 2025), Fidelity 2026 contribution limits guide, Principal 2026 retirement limits, ABA Retirement Funds 2026 Roth comparison, and ADP 2026 401(k) limits reference. SECURE 2.0 enhanced catch-up (ages 60-63 / $11,250) per Section 109 of the SECURE 2.0 Act of 2022.