The right order for your retirement dollars.
Most calculators hedge. This one commits. Get the employer match (ERISA section 203 vesting clock starts day one), max the Roth IRA at $7,500 under IRC section 408A(c)(2), then back to the 401k toward the $24,500 employee cap in IRC section 402(g). Below is the math, the 2026 IRS limits, and a calculator anchored to IRS Notice 2025-67.
- 1MatchEmployer capOften 3-6% of salary. Capture every dollar before funding any IRA.
- 2Roth IRA$7,500Tax-free growth, no RMDs, withdraw contributions any time.
- 3401k max$24,500Add $8,000 catch-up at 50, $11,250 super catch-up at 60-63.
2026 limits, statute by statute
Every figure below is anchored to its primary IRS source and statutory citation. No paraphrased third-party numbers.
| Figure | 2026 | 2025 | Statute | IRS source |
|---|---|---|---|---|
| 401(k) employee deferral | $24,500 | $23,500 | 26 U.S.C. § 402(g) | IRS Notice 2025-67 § III.B; IRS Pub 575 |
| 401(k) catch-up at 50+ | $8,000 | $7,500 | 26 U.S.C. § 414(v) | IRS Notice 2025-67 § III.C |
| SECURE 2.0 enhanced catch-up at 60-63 | $11,250 | $11,250 | 26 U.S.C. § 414(v)(2)(E); SECURE 2.0 § 109 | IRS Notice 2025-67 § III.E |
| § 415(c) annual additions cap | $72,000 | $70,000 | 26 U.S.C. § 415(c) | IRS Notice 2025-67 § III.A; IRS Pub 575 |
| § 401(a)(17) compensation limit | $360,000 | $350,000 | 26 U.S.C. § 401(a)(17) | IRS Notice 2025-67 § III.F |
| § 414(q) highly compensated threshold | $165,000 | $160,000 | 26 U.S.C. § 414(q) | IRS Notice 2025-67 § III.D |
| § 416(i) key employee threshold | $240,000 | $230,000 | 26 U.S.C. § 416(i) | IRS Notice 2025-67 § III.G |
| Roth IRA contribution | $7,500 | $7,000 | 26 U.S.C. § 408A(c)(2) | IRS Notice 2025-67 § II.A; IRS Pub 590-A Table 2-1 |
| IRA catch-up at 50+ | $1,100 | $1,000 | 26 U.S.C. § 219(b)(5)(B) | IRS Notice 2025-67; IRS Pub 590-A |
| Roth IRA phase-out (single) | $153K to $168K | $150K to $165K | 26 U.S.C. § 408A(c)(3) | IRS Pub 590-A Table 2-1 |
| Roth IRA phase-out (MFJ) | $242K to $252K | $236K to $246K | 26 U.S.C. § 408A(c)(3) | IRS Pub 590-A Table 2-1 |
| SECURE 2.0 § 603 high-earner FICA wage threshold | $145,000 | n/a (deferred) | 26 U.S.C. § 414(v)(7) | IRS Notice 2023-62; final regulations |
Source: IRS Notice 2025-67 published 13 November 2025. Cross-checked against IRS Publication 575 (Pension and Annuity Income), IRS Publication 590-A (IRA Contributions), and the IRS COLA Increases page. Last verified per the ribbon above.
401k and Roth IRA, side by side
The eight statutory differences that change the answer for almost everyone. Each row anchored to the controlling section of the Internal Revenue Code or ERISA.
| Feature | 401k | Roth IRA | Statute | Edge |
|---|---|---|---|---|
| 2026 contribution limit | $24,500 employee | $7,500 | § 402(g) / § 408A(c)(2) | 401k |
| Catch up (50+) | $8,000 (total $32,500) | $1,100 (total $8,600) | § 414(v) / § 219(b)(5)(B) | 401k |
| Tax on contributions | Pre-tax (deductible) per IRS Pub 575 | After-tax per IRS Pub 590-A | § 401(k) / § 408A | Tied |
| Tax on qualified withdrawals | Ordinary income (IRS Pub 575) | Tax-free (IRS Pub 590-B) | § 72 / § 408A(d)(2) | Roth |
| Employer match | Common; ERISA § 203 vesting applies | Never | ERISA § 203 | 401k |
| Income limits | None on contributions | $153K to $168K single phase-out | § 408A(c)(3) | 401k |
| Required minimum distributions | Yes, age 73 (75 if born 1960+) | None for owner | § 401(a)(9) / § 408A(c)(5); SECURE 2.0 § 107 | Roth |
| Withdraw contributions early | 10% penalty before 59-1/2 (exceptions) | Any time, penalty-free | § 72(t) / IRS Pub 590-B ordering rules | Roth |
| Fiduciary protection | ERISA § 404 prudent-expert standard | State + federal creditor exemption | 29 U.S.C. § 1104 / § 514 | 401k |
Project your three scenarios
Adjust your inputs. The optimal scenario captures every dollar of employer match, then a fully funded Roth IRA, then any remaining headroom against the 26 U.S.C. § 402(g) employee cap.
Project your retirement balance
Employer dollars compounded at 7%. Skip the match and this is the number you leave behind. Output uses 2026 IRS limits, including age based catch ups (50 plus) and the 60 to 63 super catch up.
Why this order works
Three reasons the match plus Roth combination beats everything else. Each grounded in the controlling IRS source.
The match is a guaranteed 50 to 100 percent return
A 50 percent match means every dollar you put in becomes $1.50 instantly. ERISA section 203 (29 U.S.C. section 1053) caps the legal cliff-vesting schedule at three years and graded vesting at six years, so the match becomes legally yours on a defined timetable. No public market consistently delivers that. Skip it and you are turning down compensation that you cannot recover later.
Roth IRA growth is permanently tax free
After-tax contributions today under 26 U.S.C. section 408A, tax-free growth, and qualified withdrawals under section 408A(d)(2) at age 59-1/2 with a five-year holding period. No required minimum distributions in your lifetime under section 408A(c)(5). You also keep access to contributions in an emergency per the Roth ordering rules in IRS Publication 590-B (contributions out first, conversions next oldest-first, earnings last).
The 401k catches what is left
Once the match is captured and the Roth IRA is full, additional 401k contributions toward the $24,500 employee cap (26 U.S.C. section 402(g)) reduce taxable income today and shelter growth from current taxes per IRS Publication 575. Employer contributions sit above that cap, against the section 415(c) combined annual additions limit of $72,000.
SECURE 2.0 provisions that matter for 2026
The 2022 Act keeps rolling out. Six provisions reshape the 401k vs Roth IRA decision this tax year.
Enhanced catch-up at ages 60-63
Catch-up rises to $11,250 for the four years from age 60 through 63, then the standard $8,000 catch-up under 26 U.S.C. § 414(v) resumes from age 64. Effective tax years beginning after 31 December 2024.
Mandatory Roth catch-up for high earners
Catch-up contributions by participants with prior-year FICA wages above $145,000 from the same employer must be designated Roth (after-tax). Per IRS Notice 2023-62, effective 2026 (delayed from 2024). Plans that do not offer a Roth option lose the catch-up entirely for high earners.
Roth employer match
At participant election, employer matching and non-elective contributions may be designated Roth. The Roth match is included in gross income in the year contributed but grows tax-free. Requires full vesting per IRS Notice 2024-2 Q&A L-1.
RMD age raised to 73 (75 in 2033)
Required minimum distributions begin at age 73 for participants born 1951-1959 and at age 75 for those born 1960 or later. Roth 401(k) lifetime RMDs were repealed by SECURE 2.0 § 325 effective tax year 2024.
Student-loan payment match
Plans may treat qualified student-loan payments as if they were employee elective deferrals for purposes of matching contributions. Effective plan years after 31 December 2023. See IRS Notice 2024-63 for guidance.
Mandatory auto-enrollment for new plans
401(k) and 403(b) plans established after 29 December 2022 must auto-enroll participants at 3 to 10 percent with 1 percent annual escalation to at least 10 percent. Existing plans are grandfathered. Effective plan years after 31 December 2024 per IRS Notice 2024-2.
Your 401k is ERISA-protected. Your Roth IRA is not.
One of the structural differences nobody talks about. ERISA wraps your 401k in federal fiduciary duty, disclosure rules, and creditor protection. Roth IRAs are state-protected with federal bankruptcy backstop.
Fiduciary duty (prudent expert standard)
Plan fiduciaries must act solely in the interest of participants, with the care and skill of a prudent person familiar with such matters. Breach is actionable under ERISA § 502 (29 U.S.C. § 1132) for plan losses, equitable relief, and attorneys' fees.
Vesting standards
Employer matching contributions must vest no later than three-year cliff or six-year graded. Once vested, the match is yours regardless of when you leave.
Participant fee disclosure
Plan administrator must annually disclose plan-level and investment-level fees. Quarterly statements must show actual dollar fees charged. If you can't find them, that's a regulatory red flag.
Service-provider disclosure
Service providers expecting more than $1,000 in compensation must disclose, in writing and in advance, services, fiduciary status, direct compensation, indirect compensation, and termination compensation. Failure makes the contract a prohibited transaction.
QDIA safe harbor
Default investment alternatives (target-date funds, balanced funds, managed accounts) provide fiduciary liability relief for default contributions if notice and management requirements are met.
Prohibited transactions + preemption
Section 406 prohibits self-dealing and party-in-interest transactions. Section 514 preempts most state law on benefit plans, giving 401k assets federal-level creditor protection in bankruptcy under 11 U.S.C. § 522(b)(3)(C). Roth IRAs rely on state exemption statutes plus 11 U.S.C. § 522(n).
What people ask first
Should I contribute to my 401k or Roth IRA first?+
401k up to the employer match first, every time. After the full match, max the Roth IRA at $7,500 ($8,600 at 50+). Then back to the 401k toward the $24,500 employee cap. The 2026 limits table above lists the underlying IRS sources for every figure.
What is the 401k contribution limit for 2026?+
$24,500 base. Add an $8,000 catch-up at age 50 for $32,500. Ages 60-63 get a SECURE 2.0 super catch-up of $11,250 for $35,750. Combined employee plus employer additions cap at $72,000. All four figures come from IRS Notice 2025-67; see /methodology for the per-figure statute citations.
Can I contribute to both a 401k and a Roth IRA?+
Yes. The 401k cap and the Roth IRA cap are independent and live in separate accounts. The only ceiling on the Roth IRA is the income phase-out: $153,000 to $168,000 single and $242,000 to $252,000 MFJ in 2026. Above the phase-out, see the backdoor Roth answer below.
What if I earn too much for a Roth IRA?+
Use the backdoor Roth IRA: a non-deductible Traditional IRA contribution, then convert. Watch the pro-rata rule if you have other pre-tax IRA balances. Report on IRS Form 8606. See /backdoor-roth for the step-by-step.
Does the match count toward the $24,500 401k limit?+
No. The $24,500 employee deferral cap is separate from the $72,000 combined-additions cap. The match sits above the deferral cap and against the $72,000 ceiling, so a generous match does not eat into your own contribution room.
What is the mega backdoor Roth?+
After-tax contributions into a 401k (filling the gap between the $24,500 deferral cap and the $72,000 total-additions cap), then either an in-plan Roth conversion or an in-service rollover. Your plan must permit both pieces. See /mega-backdoor-roth for the SECURE 2.0 mechanics and a plan-eligibility checklist.
Companion sites for the rest of the stack
The 401k vs Roth IRA decision is one wrapper choice. Within and around it sit three other decisions: tax treatment of the IRA itself, fund selection inside both wrappers, and where the HSA fits in the priority order.