Should I take the employer match before contributing to a Roth IRA?

Yes. You should always contribute enough to your traditional or workplace 401(k) to capture the maximum employer matching contribution before funding a Roth IRA. An employer match represents an immediate, guaranteed 50% to 100% return on your contributed dollars that no tax arbitrage strategy or market investment can match. For example, contributing $8,000 with a 50% match instantly deposits $12,000 into your account before compounding begins. Only after capturing all available matching funds should you consider redirecting additional discretionary savings into an individual Roth IRA.

What happens if my tax rate is the same now and in retirement?

If your marginal income tax rate is identical during your contribution years and your retirement withdrawal years, and no employer match is involved, a traditional 401(k) and a Roth IRA produce the exact same after-tax retirement balance on an equal-cost basis. For instance, allocating $8,000 of gross pay at a 22% current rate and a 22% retirement rate over 30 years at 7% return yields exactly $589,435.31 in after-tax wealth in both accounts ($0.00 difference). This mathematical tie proves that when tax rates remain constant, the chronological order of taxation has zero impact on your final net return.

Can I contribute to both a 401(k) and a Roth IRA in the same year?

Yes. Participating in an employer-sponsored 401(k) does not restrict your eligibility to contribute to an individual Roth IRA, provided your modified adjusted gross income falls within IRS statutory phase-out limits. In 2026, you can contribute up to the maximum elective deferral of $24,500 in your 401(k) (plus $8,000 if age 50 or older) and simultaneously contribute up to $7,500 in your Roth IRA (plus $1,100 if age 50 or older), allowing eligible workers under 50 to shelter up to $32,000 in total tax-advantaged annual retirement savings.

What are the Roth IRA income phase-out limits for 2026?

For tax year 2026, direct contributions to a Roth IRA phase out between $153,000 and $168,000 of modified adjusted gross income (MAGI) for single filers, and between $242,000 and $252,000 for married couples filing jointly. If your income exceeds the upper threshold, you cannot make direct contributions to a Roth IRA, though you remain fully entitled to contribute up to the maximum statutory limit in a workplace traditional 401(k) regardless of income. High-earning households can also evaluate a Backdoor Roth IRA conversion as an alternative funding mechanism.

How do Required Minimum Distributions (RMDs) differ between a 401(k) and a Roth IRA?

Traditional 401(k) accounts are subject to IRS Required Minimum Distributions (RMDs) starting at age 73 (rising to age 75 under the SECURE 2.0 Act). The IRS requires you to withdraw a calculated percentage of your pre-tax balance annually and pay ordinary income tax on every dollar. In contrast, Roth IRAs have zero Required Minimum Distributions during the original owner’s lifetime. Your Roth IRA funds can stay fully invested and continue compounding tax-free for your entire life, making the Roth IRA a powerful estate planning and legacy tool.

2026 Statutory Rates Primary Source Verified Always 100% Free

401(k) vs Roth IRA Calculator

Compare after-tax retirement balances side-by-side on an equal-cost basis. See how your tax bracket today versus in retirement, plus your employer match, decides the true winner.

Quick Answer: Under an equal-cost comparison model, allocating $8,000 of annual gross pay into a traditional 401(k) versus a Roth IRA produces substantially different wealth depending on tax timing and company match. At a 22% current marginal tax rate, the traditional 401(k) receives the full $8,000 pre-tax while the Roth IRA receives $6,240 after upfront taxes. Assuming a 50% employer match ($4,000/year) and an assumed 7% annual return over 30 years, the traditional 401(k) reaches $1,133,529.44, leaving $884,152.96 after a 22% withdrawal tax. The Roth IRA grows completely tax-free to $589,435.31. In this standard baseline scenario, the traditional 401(k) leads by $294,717.65 because the employer match provides an immediate return that outperforms tax-timing alone.

Your Contribution & Plan Details

Gross Pay Set Aside / Year Equal-cost starting point

Amount of pre-tax salary you earmark for retirement each year.

Current Marginal Tax Rate Your tax bracket today

Used to compute immediate tax savings for 401(k) and upfront tax for Roth IRA.

Retirement Marginal Tax Rate Expected bracket in retirement

Effective tax rate on future 401(k) withdrawals (Roth withdrawals are tax-free).

Employer Match % of Contribution e.g. 50% match

Percentage of your 401(k) contribution matched by your company (assumed 100% vested).

Years to Retirement

yrs

Assumed Return

assumed return — not a quoted market rate

I am age 50 or older (apply 2026 catch-up limits)

Increases 401(k) limit to $32,500 and Roth IRA limit to $8,600.

Equal-Cost Starting Basis

From $8,000 of gross pay: 401(k) receives $8,000; Roth IRA receives $6,240 after 22% tax now.

Traditional 401(k) LEADER

$884,153

After-Tax Wealth in Retirement

Annual Inflow: $12,000/yr

Tax Saved Now: $1,760/yr

Tax at Exit (22%): $249,376

Roth IRA

$589,435

After-Tax Wealth in Retirement

Annual Inflow: $6,240/yr

Tax Paid Now: $1,760/yr

Tax at Exit: $0 (Tax-Free)

Metric 401(k) Roth IRA

Annual Employee Deposit $8,000 $6,240

Annual Employer Match +$4,000 $0 (None)

Total Annual Inflow $12,000 $6,240

Pre-Tax Wealth at 30 Yrs $1,133,529 $589,435

Estimated Exit Tax -$249,376 $0 (Tax-Free)

Net After-Tax Balance $884,153 $589,435

Primary Source Verified Last reviewed: October 2026

Calculation Methodology: 401(k) vs Roth IRA Calculator

Mathematical Formula

Equal-Cost Annuity: FV = (Contribution + Match) * [((1 + r)^n - 1) / r]

Annual ordinary annuity compound formula evaluated on an equal-cost basis. Gross pay set aside is contributed pre-tax into the 401(k) alongside any employer match, and taxed at withdrawal. For the Roth IRA, gross pay is taxed at your current rate before contribution, but qualified retirement withdrawals are 100% tax-free.

Statutory Rules & Comparison Mechanics (2026)

Equal-Cost Basis (Mandatory Standard): A mathematically rigorous comparison requires starting from the exact same pre-tax gross pay ($G$). A $10,000 Roth deposit requires significantly more take-home earnings than a $10,000 pre-tax 401(k) contribution. By anchoring both sides to gross salary ($G$), the 401(k) receives $G$ pre-tax, while the Roth IRA receives $G \times (1 - \text{current tax rate})$. Both received amounts are displayed side-by-side to ensure full transparency.
The Core Decision Rule: With no employer match: Roth wins if your retirement tax rate is HIGHER than your current rate; traditional 401(k) wins if your retirement rate is LOWER; they TIE if the rates are equal. An employer match can override all three — always take the match first.
2026 Statutory Contribution Limits: Under IRS Rev. Proc. 2025-32 and Notice 2024-80, the 2026 elective deferral limit for workplace 401(k) plans is $24,500, with a standard age 50+ catch-up limit of $8,000 (totaling $32,500). Individual Roth IRA contributions are capped at $7,500, with an age 50+ catch-up limit of $1,100 (totaling $8,600). The SECURE 2.0 Act super catch-up for ages 60–63 ($11,250) is acknowledged but not modeled; this tool standardizes on the general 50+ catch-up provisions.
Roth IRA Income Phase-Outs: Direct contributions to a Roth IRA phase out in 2026 between $153,000 and $168,000 MAGI for single filers, and between $242,000 and $252,000 for married couples filing jointly. Individuals exceeding these thresholds cannot contribute directly to a Roth IRA, though they can make full workplace 401(k) contributions regardless of income. For standalone Roth projections, explore our Roth IRA Calculator.
Scope & Disclaimers: This calculator models federal tax brackets only and quotes no state tax rates. It does not model Required Minimum Distributions (RMDs apply to traditional 401(k)s starting at age 73/75 under SECURE 2.0, but never apply to Roth IRAs during the owner’s lifetime), early withdrawal penalties, employer vesting schedules (match is modeled as 100% immediately vested), or employer match salary caps. The assumed return is an adjustable parameter, not a guaranteed projection of market performance.

Verified Worked Example (Benchmark)

Statutory Verification Benchmarks (Reproduced to the Exact Cent):

Benchmark A — Traditional 401(k) Wins, No Match (Current 22% → Retirement 12%):
Inputs: Gross Pay $8,000/yr, 0% match, 30 years at 7% return (annuity factor F = 94.460786).
401(k): Received $8,000/yr, Pre-tax FV $755,686.29, Tax at withdrawal (12%) $90,682.35 → After-Tax Value: $665,003.94.
Roth IRA: Received $6,240/yr ($1,760 tax paid now), Tax at exit $0 → After-Tax Value: $589,435.31.
Winner: Traditional 401(k) by $75,568.63. Tax paid/saved today: $1,760/yr.

Benchmark B — Roth IRA Wins, No Match (Current 12% → Retirement 22%):
Inputs: Gross Pay $8,000/yr, 0% match, 30 years at 7% return.
401(k): Received $8,000/yr, Pre-tax FV $755,686.29, Tax at withdrawal (22%) $166,250.98 → After-Tax Value: $589,435.31.
Roth IRA: Received $7,040/yr ($960 tax paid now), Tax at exit $0 → After-Tax Value: $665,003.94.
Winner: Roth IRA by $75,568.63 (exact symmetric mirror of Benchmark A).

Benchmark C — Exact Mathematical Tie (Current 22% == Retirement 22%, 0% Match):
Inputs: Gross Pay $8,000/yr, 0% match, 30 years at 7% return.
401(k): Received $8,000/yr → After-Tax Value: $589,435.31.
Roth IRA: Received $6,240/yr → After-Tax Value: $589,435.31.
Outcome: Exact Tie ($0.00 difference). Proves timing of taxation has zero net impact when rates are constant.

Benchmark D — First-Load Defaults (Current 22%, Retirement 22%, 50% Employer Match):
Inputs: Gross Pay $8,000/yr, 50% match ($4,000/yr), 30 years at 7% return.
401(k): Inflow $12,000/yr, Pre-tax FV $1,133,529.44, Tax at exit (22%) $249,376.48 → After-Tax Value: $884,152.96.
Roth IRA: Received $6,240/yr → After-Tax Value: $589,435.31.
Winner: Traditional 401(k) by $294,717.65. Capturing the employer match overrides equal tax rates.

Cap Functional Verification ($30,000 Gross Pay, 22% Current, 50% Match, Under 50):
401(k) Elective Deferral: Capped at $24,500.00 (cap note displayed) + Match $12,250.00.
Roth IRA Contribution: Net pay $23,400.00 is capped at $7,500.00 (cap note displayed). Surplus after-tax funds ($15,900.00) remain outside the Roth.