Home · Learn · 401(k) vs IRA vs Roth
Retirement · Taxes
The menu is three wrappers. The job is one funding order. A 401(k) is the workplace bucket with a match and a $24,500 elective. An IRA is the $7,500 bucket you open yourself. Roth is a tax flavor, not a third account: Roth 401(k) and Roth IRA are different doors with different MAGI rules. Skip the match to “max the Roth first” and you light free money.
Updated 2026-09-09 · 11 min read · Educational, not tax advice. Figures are Notice 2025-67 / IR-2025-111 (Nov. 13, 2025). Payday sequence: paycheck to investing. Roth vs traditional dollars: calculator.
| 401(k) / 403(b) / 457 | Traditional IRA | Roth IRA | |
|---|---|---|---|
| 2026 employee cap | $24,500 + $8,000 at 50+ ($11,250 at 60–63) | $7,500 combined across traditional + Roth, + $1,100 at 50+ | |
| Who offers it | Your employer (or a solo 401(k) you sponsor) | Any IRA custodian | Any IRA custodian |
| Employer match | Yes, if the SPD says so | No | No |
| MAGI to contribute | None on the elective | None. Deduction may phase. | Single $153k–$168k; MFJ $242k–$252k |
| Tax now | Pre-tax elective skips income tax, not FICA. Roth 401(k) skips neither on the stub. | Deduction if you qualify | No deduction. Qualified withdrawals tax-free. |
| RMDs while you are alive | Yes on pre-tax (Roth 401(k) too, unless rolled to a Roth IRA) | Yes, age 73 or 75 | No for the original owner |
A Roth 401(k) uses the $24,500 elective, not the $7,500 IRA cap, and has no MAGI ceiling. It is not a Roth IRA. People google “Roth vs 401(k)” as if those were opposites. They are a flavor and a wrapper.
Worked slice
100% match on the first 4%. Match is $3,800 employee + $3,800 employer. MAGI $95,000 is above the 2026 traditional-IRA deduction phase-out ($81k–$91k if you have a workplace plan) and well under the Roth IRA front door ($153k). Direct Roth IRA $7,500. Remaining 401(k) elective $20,700. Skipping the match to fund the Roth first leaves $3,800 on the table.
The usual “no”
Covered by a 401(k), single, MAGI $95,000: traditional IRA deduction is $0. Dumping $7,500 in anyway creates a nondeductible IRA you will later trip over if you want a backdoor Roth. The $7,500 door that is still open at this MAGI is Roth, not a fake deduction.
Mega after-tax 401(k) is optional capacity after the elective is full, and only if the plan names both features. It is not step one. Calendar for the IRA year: what you can still fund — 2025 IRA closed April 15, 2026; 2026 IRA runs through April 15, 2027.
| Item | 2026 |
|---|---|
| 402(g) elective (401(k) / 403(b) / 457 / TSP) | $24,500 |
| Age-50 catch-up (414(v)) | $8,000 |
| Ages 60–63 super catch-up | $11,250 |
| 415(c) annual additions (not including catch-up) | $72,000 |
| Compensation limit 401(a)(17) | $360,000 |
| IRA / Roth IRA combined | $7,500 + $1,100 at 50+ |
| Roth IRA MAGI — single / HOH | $153,000–$168,000 |
| Roth IRA MAGI — MFJ | $242,000–$252,000 |
| Traditional IRA deduction — single, covered at work | $81,000–$91,000 |
| Traditional IRA deduction — MFJ, contributor covered | $129,000–$149,000 |
| Traditional IRA deduction — MFJ, only spouse covered | $242,000–$252,000 |
| Roth catch-up wage threshold (prior-year Box 3 from that employer) | $150,000 |
MFS who lived with a spouse: both the Roth contribution band and the covered-employee IRA deduction band stay $0–$10,000 (not indexed). Saver’s Credit MAGI ceilings for 2026 are $80,500 MFJ, $60,375 HOH, $40,250 single / MFS — a different test, not a contribution cap. SIMPLE IRA employee elective is $17,000; it is not this page.
Traditional if you are in 24% or 32% now and reasonably expect 12% or 22% later. Roth if you are in 12% now, expect raises, want a tax-free sleeve, or are hedging tax law. Split is allowed: Roth IRA + traditional 401(k) is a common household, not a contradiction. A Roth 401(k) and a Roth IRA both grow tax-free; the IRA has no RMD during your life and usually cheaper funds. The 401(k) has the match and the bigger cap.
Same paycheck cost, different nest egg at a guessed retirement bracket: Roth vs traditional calculator. Do not freeze a guessed 7% return as a promise.
Direct Roth IRA dies at the top of the band. Traditional IRA contributions do not; the deduction does, if you (or a spouse) are covered by a workplace plan. That is why a $95k single filer with a 401(k) still funds a Roth IRA, and a $260k couple uses a backdoor instead of pretending the deduction still exists.
Backdoor: nondeductible traditional contribution, then convert. Pro-rata looks at every traditional, SEP, and SIMPLE IRA you own. Mega is different — leftover 415(c) inside the 401(k). Walk those two in backdoor Roth and mega backdoor. Do not roll after-tax 401(k) money into a traditional IRA; that is how mega dirties the backdoor.
SECURE 2.0 §603: if 2025 Social Security wages from that employer exceeded $150,000, 2026 age-50+ catch-up in that plan must be Roth. The $24,500 elective can still be pre-tax. Ages 60–63 still get the $11,250 super catch-up; the Roth-flavor rule is about the catch-up source, not the dollar amount. If the plan cannot take Roth catch-up, some recordkeepers are refusing the catch-up entirely — read the SPD before you assume $8,000 more pre-tax.
This is not mega. Mega is after-tax employee money under 415(c). Catch-up sits outside 415(c). Mixing those two sentences is how a $175k W-2 earner under-funds the elective and over-funds a source the plan will refund in April. Catch-up ages: catch-up contributions.
A target-date fund at 0.08% in the 401(k) beats a brilliant three-fund IRA you never fund. Increase the deferral 1% at every raise. 1099 / Schedule C has no match to capture; a solo 401(k) or SEP is the workplace plan, and deferrals share the $24,500 with any W-2 401(k) — self-employment tax and the 20% math.
Leaving a job is a different file: keep / new plan / IRA / Roth conversion / cash-out, and a dirty-IRA conflict if you still want a clean backdoor — 401(k) rollover.
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Same paycheck cost, after-tax nest egg at a guessed later bracket. Type your rate — defaults are examples.
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12-step payday file: match → HYSA sleeve → HSA payroll → Roth/trad → dated cash → taxable.
Elective $24,500; age-50 catch-up $8,000; ages 60–63 $11,250. IRA / Roth IRA $7,500 + $1,100 at 50+. 415(c) $72,000, catch-up outside it. Notice 2025-67 / IR-2025-111.
Traditional if this bracket is high and later’s is likely lower. Roth if you are early-career, expect raises, or want a no-RMD IRA sleeve. Split is allowed. Run the calculator.
Yes. Separate caps. A workplace plan can kill the traditional IRA deduction (single $81k–$91k in 2026). Direct Roth still has its own MAGI test.
No. Match lives in the $72,000 415(c) cap. Leftover 415(c) is theoretical mega room, not extra elective.
Single / HOH $153k–$168k. MFJ $242k–$252k. MFS (lived together) $0–$10k. Above the top: backdoor, if your IRAs are clean.
Prior-year Social Security wages from that employer over $150,000 → age-50+ catch-up must be Roth. First year live. Confirm the plan. Not mega.
Backdoor = $7,500 IRA when MAGI blocks a direct Roth. Mega = after-tax 401(k) + conversion path under $72,000 415(c). Different rakes.
Match → high-APR / cash sleeve → HSA → IRA (or backdoor) → rest of 401(k) + catch-up → mega if the SPD allows it → taxable.
Educational only. Confirm Notice 2025-67, your SPD, and Form 8606 before you contribute. Written by Thomas Sanders.