Side-by-Side
Full Feature Comparison
Every key difference between a 401(k) and a Roth IRA in one table.
| Feature | 401(k) | Roth IRA |
|---|---|---|
2026 Contribution Limit |
$24,500 | $7,500 |
Catch-Up (Age 50+) |
+$8,000 | +$1,100 |
SECURE 2.0 Super Catch-Up Ages 60–63 only |
+$11,250 | — |
Who Can Contribute |
Employees w/ plan | Anyone w/ earned income & eligible MAGI |
Tax on Contribution |
Pre-tax (reduces taxable income) | After-tax (no deduction) |
Tax on Qualified Withdrawal |
Taxed as ordinary income | Tax-free ✓ |
Income Limit |
None | Phase-out: Single $153,000–$168,000 |
Employer Match |
Often offered | No |
Early Withdrawal (before 59½) |
10% penalty + taxes on entire amount | Contributions: anytime penalty-free Earnings: 10% penalty + taxes |
Required Minimum Distributions |
Yes — age 73 (age 75 in 2033) | Never (owner's lifetime) |
Investment Options |
Limited to plan's menu | Any — stocks, bonds, ETFs, REITs |
Loan Provision |
Often allowed (up to 50% / $50k) | No loans |
Portability on Job Change |
Roll over to IRA or new 401(k) | Stays with you always |
Strengths & Weaknesses
Pros & Cons
- Higher contribution limit — up to $24,500 per year
- Employer match is essentially free money (always contribute at least enough to get the full match)
- No income limit — anyone with an employer plan can contribute
- Immediate tax deduction reduces your taxable income this year
- SECURE 2.0 super catch-up (+$11,250) for ages 60–63
- Loan option if plan allows
- All withdrawals taxed as ordinary income in retirement
- RMDs required starting age 73 — you must take withdrawals whether you want to or not
- Investment options limited to what your employer offers
- Plan quality varies widely between employers
- Qualified withdrawals are 100% tax-free — no income taxes in retirement
- No RMDs — never forced to take money out
- Contributions (not earnings) can be withdrawn anytime without penalty
- Complete investment flexibility — any brokerage, any asset
- No impact on Social Security taxation (not counted as income)
- Great estate planning tool — heirs get tax-free growth
- Lower contribution limit — only $7,500 per year
- Income limits — phases out above $153,000 (single) / $242,000 (MFJ) in 2026
- No employer match
- No upfront tax deduction — you pay taxes now
Decision Guide
Which Should You Choose?
The right answer usually depends on your current vs expected future tax rate.
- Your employer offers a match (always capture the full match first)
- You're in a high tax bracket now and expect to be in a lower bracket in retirement
- Your income exceeds the Roth IRA phase-out limits
- You need to lower your taxable income this year (self-employed Keogh-style or W-2)
- You want access to a loan provision
- You're late-career (60–63) and want the larger super catch-up
- You're early in your career and expect your income to grow
- You're in a low or moderate tax bracket now
- You want tax-free income in retirement (to reduce Medicare IRMAA, SS taxation)
- You want the flexibility to withdraw contributions without penalty
- You want to leave a tax-free inheritance to heirs
- You want to avoid RMDs and maintain full control over distributions
FAQ
Common Questions
Yes. They have completely separate contribution limits. In 2026 you can put up to $24,500 in your 401(k) and up to $7,500 in a Roth IRA (subject to income limits). They do not count against each other.
If your MAGI exceeds the Roth IRA phase-out ($168,000 single / $252,000 MFJ in 2026), you can use the "backdoor Roth" strategy: make a non-deductible Traditional IRA contribution and immediately convert it to Roth. This is legal and commonly used by high earners.
Traditional 401(k)s require RMDs starting at age 73 (age 75 starting in 2033 per SECURE 2.0). If you're still working at 73, you may be able to delay RMDs from your current employer's plan. Roth 401(k)s and Roth IRAs have no RMDs during the owner's lifetime as of 2024.
Yes. Roth IRA contributions — not earnings — can be withdrawn at any time without taxes or penalties. This makes the Roth IRA a flexible emergency-ish backup. Earnings are subject to a 10% penalty and income tax if withdrawn before age 59½ and before the account is at least 5 years old.
To withdraw Roth IRA earnings tax- and penalty-free, the account must be at least 5 years old (starting from January 1 of the year of your first Roth IRA contribution) AND you must be at least 59½. Contributions are always accessible tax-free regardless of age or account age.
Workers aged 60–63 can make a "super catch-up" contribution of $11,250 to their 401(k) in 2026 — larger than the standard $8,000 catch-up for ages 50–59. The Roth IRA has no equivalent super catch-up provision.