A Roth IRA and a 401(k) are both retirement accounts, but they differ on who runs them, how much you can put in, and when the tax is paid. A 401(k) is an employer plan with a 2026 contribution limit of $24,500 and often a company match, funded with pretax money you are taxed on later. A Roth IRA is a personal account you open yourself, with a $7,500 limit, funded with after-tax money that then grows and comes out tax-free in retirement.

Most people are not choosing one instead of the other. The common pattern is to use both, in an order set by the employer match and by current income. The figures below are the official 2026 limits from the Internal Revenue Service.

The 2026 contribution limits

For 2026, the IRS set the employee contribution limit for 401(k), 403(b), most 457 plans and the federal Thrift Savings Plan at $24,500, up from $23,500 in 2025. Workers aged 50 and older can add a catch-up of $8,000, for a total of $32,500. A larger catch-up of $11,250 applies to workers aged 60 to 63, in place of the $8,000.

The Roth IRA limit is much lower: $7,500 for 2026, up from $7,000, with a $1,100 catch-up for those 50 and older. That gap, $24,500 against $7,500, is the single biggest practical difference between the two accounts. All of these figures come from IRS Notice 2025-67, released in November 2025.

How each one is taxed

This is the heart of the Roth-versus-traditional question. A traditional 401(k) contribution lowers your taxable income now; you pay income tax when you withdraw in retirement. A Roth IRA gives no deduction today, but qualified withdrawals, including all the growth, are tax-free.

Put simply, a traditional 401(k) bets your tax rate will be lower in retirement than today. A Roth bets the opposite, or at least values the certainty of a known, tax-free pot. Neither bet is universally right. For an explainer on how the growth itself builds up over decades, see compound interest. Many 401(k) plans now also offer a Roth 401(k) option, which combines the high 401(k) limit with Roth tax treatment and has no income cap.

The employer match changes the math

A 401(k) match is money the employer adds when you contribute, often 50 cents or a dollar per dollar up to a percentage of pay. It is the one part of this that is close to a free addition to your savings, and it exists only in the employer plan, not in a Roth IRA.

That is why the usual sequence runs: contribute enough to the 401(k) to get the full match first, because leaving a match unclaimed forfeits part of your compensation. What you do after that, more 401(k) or a Roth IRA, depends on your tax picture and the fund choices in each.

Income limits and the backdoor question

The Roth IRA has an income ceiling the 401(k) does not. For 2026, the ability to contribute directly to a Roth IRA phases out between $153,000 and $168,000 of modified adjusted gross income for single filers and heads of household, and between $242,000 and $252,000 for married couples filing jointly. Above the top of the range, direct Roth contributions are not allowed. For married filing separately, the range is $0 to $10,000 and is not adjusted each year.

Earners above those limits sometimes use a "backdoor" Roth, contributing to a traditional IRA and converting it. That route has tax rules of its own, especially if you hold other pretax IRA money, and is where the simple comparison stops being simple.

Who each account suits

The honest summary, without telling anyone what to do: the 401(k) match is the first claim on retirement money because nothing else returns a guaranteed addition to your contribution. A Roth IRA suits savers who expect higher tax rates later, who want tax-free money to balance taxable withdrawals, or who are early in a career with a lower current rate. A traditional 401(k) favors those in a high tax bracket now who expect a lower one in retirement.

Because the accounts tax you at opposite ends, holding both spreads the risk that future tax rates are not what you guessed. That is the reasoning behind the "use both" pattern, not a rule that one account beats the other.

The withdrawal rules differ too

Tax treatment is only half the story; the two accounts also differ on when the government forces money out. Traditional 401(k) balances are subject to required minimum distributions, mandatory annual withdrawals that begin at age 73 under current law and are taxed as income whether you need the money or not. A Roth IRA has no required minimum distributions during the original owner's lifetime, so the money can stay invested and tax-free for as long as you live, which is part of why it is also used in estate planning.

Access before retirement differs as well. Roth IRA contributions, though not the earnings, can generally be withdrawn at any time without tax or penalty, because you already paid tax on them. A 401(k) is harder to reach early, typically through a loan or a hardship withdrawal, and an early withdrawal of pretax money usually brings income tax plus a 10 percent penalty. These rules change periodically, so confirm the current ones with the IRS before acting.

What to watch

Three things decide more than the Roth-versus-traditional label. The match, which is the highest-value piece and is easy to under-fund. The fees inside your 401(k) funds, which quietly erode returns over decades. And your own tax bracket now versus your best guess of it in retirement, which is the whole basis of the pretax-versus-Roth choice. The contribution limits reset each year, so check the current IRS figures before you set your payroll deferral.