A Roth 401(k) and a Roth IRA both take after-tax money in and pay qualified withdrawals out tax-free. The differences are in the limits and the rules around them. A Roth 401(k) lets you contribute up to $24,500 in 2026 with no income cap, while a Roth IRA caps you at $7,500 and phases out above $153,000 of income for single filers, according to the Internal Revenue Service. The Roth IRA gives you open investment choice and access to your contributions at any time; the Roth 401(k) gives you more room and, usually, an employer match. Which one fits depends on which of those you need.

Where the two accounts are the same

The IRS calls a Roth 401(k) a "designated Roth account," a feature inside a 401(k), 403(b) or governmental 457(b) plan. Its FAQs describe the mechanism: an employee "irrevocably designates the deferral as an after-tax contribution that the employer must deposit into a designated Roth account." The contribution is included in gross income the year it is made, and the growth is not taxed on the way out if the withdrawal is qualified.

A Roth IRA works the same way at the tax level. The IRS says you "cannot deduct contributions to a Roth IRA," and that "if you satisfy the requirements, qualified distributions are tax-free." In both cases the bet is the same: pay tax now at today's rate rather than later at an unknown one. That is the whole of the similarity. Everything below is a difference. For the pre-tax versions of these accounts, see Roth IRA vs 401(k).

Contribution limits: the biggest practical difference

The IRS announced the 2026 figures on November 13, 2025 in notice IR-2025-111. The employee deferral limit for 401(k), 403(b), governmental 457 plans and the federal Thrift Savings Plan is $24,500, up from $23,500 in 2025. The catch-up for employees aged 50 and over is $8,000, so most workers in that group can put in up to $32,500. Under a SECURE 2.0 change, employees aged 60, 61, 62 and 63 get a higher catch-up of $11,250 instead of $8,000.

The IRA limit for 2026 is $7,500, up from $7,000, with a catch-up of $1,100 for those 50 and over, so $8,600 in total. That limit is shared across all of your traditional and Roth IRAs combined, according to the IRS's IRA contribution limits page.

The ratio is the point. A worker under 50 can shelter $24,500 in a Roth 401(k) against $7,500 in a Roth IRA. The IRS FAQs confirm the two limits are separate: you can contribute the maximum to a designated Roth account and to a Roth IRA in the same year, subject to the Roth IRA's income limits. The 401(k) limit is also the combined cap for pre-tax and Roth deferrals in that plan, "in any proportion you choose," per the IRS.

Income limits: the Roth IRA has them, the Roth 401(k) does not

This is where many higher earners find the Roth IRA closed to them. For 2026 the IRS says the income phase-out range for Roth IRA contributions is $153,000 to $168,000 of modified adjusted gross income for singles and heads of household, up from $150,000 to $165,000 in 2025, and $242,000 to $252,000 for married couples filing jointly, up from $236,000 to $246,000. A married person filing separately has a range of $0 to $10,000 that is not adjusted for inflation. Inside the range the allowed contribution shrinks; above it, direct contributions are not permitted.

The Roth 401(k) has no such test. The IRS's FAQ answers the question directly: "No, there are no limits on your income in determining if you can make designated Roth contributions. Of course, you have to have salary from which to make any 401(k), 403(b) or governmental 457(b) deferrals." For a reader above the Roth IRA phase-out, the Roth 401(k) is the only one of the two that accepts a direct contribution.

Employer match and investment choice

A Roth 401(k) exists only through an employer, and not every plan offers the Roth feature; NerdWallet notes the pre-tax version is more common. Where it exists, employer matching is allowed. The IRS FAQ says the employer "must allocate any contributions to match designated Roth contributions into a pre-tax account," so the match sits in the traditional side and is taxed on withdrawal; NerdWallet adds that under current plan rules a match may go into either account depending on the employer. A Roth IRA has no employer and no match, though NerdWallet notes some brokerages offer a matching incentive to open an account.

Investment choice runs the other way. In a 401(k) you are limited to the plan provider's menu; in an IRA you choose the broker and can hold most listed securities. How to think about building either portfolio is covered in what asset allocation is.

Withdrawals, the five-year rule and RMDs

A qualified, tax-free distribution from a designated Roth account requires two things, per the IRS: it must be made after "a 5-taxable-year period of participation" that starts on the first day of the tax year of your first designated Roth contribution to that plan, and it must be made on or after age 59½, after death, or because of disability. Roth IRAs apply their own requirements for qualified distributions.

Access before then differs. NerdWallet's comparison states that original Roth IRA contributions "can be withdrawn at any time without penalty or taxes," with only early withdrawal of earnings taxed and penalized, while early withdrawals of Roth 401(k) contributions and earnings "may be taxed and penalized." That flexibility is the Roth IRA's main advantage for someone who may need the money before retirement.

Required minimum distributions no longer separate them. The IRS's RMD FAQ says: "Withdrawals from Roth IRAs and Designated Roth accounts (401(k) or 403(b)) are not required until after the death of the account owner. However, beneficiaries of Roth IRAs and Designated Roth accounts are subject to RMD rules." Before SECURE 2.0, Roth 401(k)s had lifetime RMDs; that difference is gone.

Can you have both?

Yes. The IRS FAQ confirms a worker can contribute the maximum to a designated Roth account and to a Roth IRA in the same year, income limits permitting. The 401(k) covers the bulk and captures any match; the IRA adds $7,500 with open investment choice and penalty-free access to contributions. A reader above the Roth IRA phase-out is limited to the 401(k) side for direct contributions. For the pre-tax comparison, see 401(k) vs IRA.

Our take

The claim that a Roth 401(k) is a bigger Roth IRA is half right. The tax wrapper is identical and the 401(k) holds more than three times as much. But the IRA's open menu, its no-penalty access to contributions and its income test make it a different instrument, not a smaller one. The three numbers that decide the question for any reader are the deferral limit, the IRA limit and the Roth IRA phase-out range, and the IRS resets all three each November. We do not tell anyone which account to fund. The 2026 figures above are the ones to check against your own filing status.