The 401k vs IRA comparison shows side-by-side rules for all three major retirement accounts: 401(k), Traditional IRA, and Roth IRA. Limits and rules shown for 2026. Tax laws change annually — verify with IRS.gov before making decisions.
Side-by-Side Comparison — 2026
| Feature | 401(k) | Traditional IRA | Roth IRA |
|---|---|---|---|
| 2026 Limit | $23,500 | $7,000 | $7,000 |
| Age 50+ Catch-Up | $31,000 | $8,000 | $8,000 |
| Contribution Type | Pre-tax (or Roth) | Pre-tax (if eligible) | After-tax |
| Withdrawals | Taxed + 10% early | Taxed + 10% early | Tax-free (qualified) |
| Employer Match | Yes (unique advantage) | No | No |
| Income Limits | None | Deductibility phased out | Phase-out $150K-$165K single |
| Investment Options | Limited to plan menu | Any brokerage | Any brokerage |
| RMDs at 73 | Yes | Yes | No RMDs |
| Employer Required? | Yes (workplace plan) | No (anyone can open) | No (anyone can open) |
| Loans Allowed? | Yes (plan dependent) | No | No (contributions only) |
Contribution Priority Calculator
Enter your situation to see recommended order for maximizing retirement contributions.
How to Compare 401k vs IRA Accounts
Most financial advisors recommend a priority order for retirement contributions: match, IRA, then max 401k. This maximizes employer match (free money), leverages IRA's better investment options, then uses the higher 401k limit for remaining savings.
The employer match is always first
A 50% match up to 6% of salary is a guaranteed 50% return on your contribution. A $5,000 salary × 6% = $3,000 contribution, which generates $1,500 in free employer money. No investment can guarantee that return — always capture the full match before doing anything else.
IRA advantages over 401k
IRAs let you invest in any asset at any brokerage — low-cost index funds like Vanguard's VTSAX (0.04% expense ratio), individual stocks, ETFs, or REITs. Many 401k plans only offer higher-cost funds with 0.5-1%+ expense ratios. That difference compounds significantly over 30 years.
Roth IRA income limits
If your income exceeds the Roth IRA phase-out ($150K-$165K single in 2026), consider the backdoor Roth: contribute to a non-deductible Traditional IRA, then immediately convert to Roth. This is legal but complex — avoid it if you have existing pre-tax IRA balances without professional guidance.
FAQ
Is this 401k vs IRA comparison free?
Yes, completely free with no signup required. Tax laws change annually — verify current limits with the IRS.
What are the 2026 contribution limits?
For 2026: 401k limit is $23,500 ($31,000 age 50+). IRA limit is $7,000 ($8,000 age 50+). These are separate limits — you can max both accounts in the same year for a combined $30,500 ($39,000 age 50+).
Should I contribute to 401k or IRA first?
The standard priority: (1) 401k up to the employer match — this is an instant 50-100% return; (2) max IRA if eligible — more investment options than most 401k plans; (3) go back to max the 401k; (4) taxable brokerage for additional savings. If your 401k has bad funds and high fees, max the IRA before going back to 401k.
What are the Roth IRA income limits for 2026?
For 2026, Roth IRA contributions phase out between $150,000-$165,000 modified AGI (single) and $236,000-$246,000 (married filing jointly). Above these limits, you cannot contribute directly to a Roth IRA — but you may be able to use the 'backdoor Roth' strategy.
What is the backdoor Roth IRA?
High earners who exceed Roth IRA income limits can make a non-deductible Traditional IRA contribution, then immediately convert it to a Roth IRA. This 'backdoor' conversion is legal but has tax complications if you have existing pre-tax IRA balances (the 'pro-rata rule'). Consult a tax advisor before executing.