Roth 401(k) vs Roth IRA

Both are after-tax. Everything else differs — the limit, the income test, the match, access to your own money, and who can take it in a lawsuit.

Both accounts take money that has already been taxed and then never tax it again. That is the whole family resemblance. The limits differ by more than three times, one asks what you earn and the other never does, only one collects an employer match, and only one will hand your own contributions back before you turn 59½.

Side by side, 2026

The two limits differ by more than three times

Set the ceilings side by side and most of the argument is over. $24,500 of salary deferrals to the plan, against $7,500 to the IRA. If you can save more than the IRA will take and there's a plan at work, the Roth 401(k) is the only Roth account with room for the rest.

Then look at what each ceiling is shared with, because this is where people miscount. Your $24,500 covers every dollar you defer in the year across both the Roth side and the pre-tax side, so moving half of it over buys you no extra space. The IRA figure behaves the same way across a Roth IRA and a traditional IRA. One ceiling, two accounts, in both cases.

Only one of them asks what you earn

A Roth IRA gets smaller the more you earn, and past a point it disappears. For 2026 the contribution phases out between $153,000 and $168,000 of modified AGI if you file single, and between $242,000 and $252,000 filing jointly. Married filing separately is treated harshly. That range opens at $0 and is finished by $10,000.

Nothing on the Roth 401(k) side depends on what you earn. Take home three times the IRA cut-off and you can still put the whole $24,500 into the Roth side of your plan, which is why a well-paid employee often finds the payroll route is the only Roth account open to them without a workaround.

(A workaround exists. The backdoor conversion puts money into a Roth IRA above the income limits and it does work. The traps sit in any traditional IRA balance you already hold, because the pro-rata rule looks at all of them at once. That one is a conversation for a tax professional and not for a web page.)

The match belongs to the plan, and it lands pre-tax

This is where the phrase "tax-free retirement" quietly falls apart.

Matching money is an employer contribution, and your plan tracks it as a separate source with its own tax treatment. Send every dollar of your own to the Roth side and the match still arrives untaxed, still taxable as ordinary income on the day it leaves. Your statement will list the two sources on separate lines, and only one of them comes out clean.

SECURE 2.0 opened one exception. A plan may now pay the match as Roth, and where it has adopted that, the match becomes taxable income to you in the year it's paid, on money that never touches your bank account. Most plans haven't. A Roth IRA gets no match in any form, since there's no employer within reach of it.

None of that argues against taking the match. Money taxed in forty years still beats money nobody ever gave you, and no Roth IRA comes with one attached at any price. The match calculator works out what your formula is worth.

Only the IRA lets you take your own contributions back

This is the most underrated line in the table above, and for a lot of Roth savers it settles the order.

A Roth IRA follows ordering rules. Withdrawals come out of your contributions first, then conversions, then earnings last. The contributions were taxed before they went in, so they can come back to you at any age with no tax and no penalty. Put in $7,500 and that $7,500 stays within reach for as long as you own the account.

A Roth 401(k) has no ordering rule at all. Any distribution taken before you qualify comes out pro rata: part contribution, part earnings. The earnings slice is taxed as income and normally carries the 10% early-withdrawal penalty. You can't ask the plan for only the money you already paid tax on.

Using a Roth IRA as a savings account costs you the compounding that was the reason for opening it. But if the honest choice is between funding a Roth IRA and not saving at all because the money feels locked away, fund the IRA.

I'd rather someone started than optimised.

Two five-year clocks, running on two different things

Earnings escape tax in both accounts only after five years. The similarity ends at the number five.

• Roth IRA: one clock, and it's yours rather than any provider's. It starts on 1 January of the year of your first ever Roth IRA contribution and then covers every Roth IRA you will ever own, at any custodian, for the rest of your life.
• Roth 401(k): a clock per plan, and each new plan starts a fresh one. Your first Roth contribution to this employer sets this employer's date, so somebody who has worked at three places could be holding three separate clocks. The exception is a direct rollover of an old designated Roth balance into the new plan, which carries the older date across with the money.
• Move plan money into a Roth IRA and it adopts the IRA's clock, however long that one has been running. A Roth IRA opened years ago and barely funded can hand its history to a balance that arrives tomorrow.

Five years on its own is not enough in either account. A qualified distribution also needs a qualifying event: reaching 59½, disability, death, or in an IRA only, up to $10,000 toward a first home.

A good plan menu can beat an IRA, and you can't walk out of a bad one

Choice. The 401(k) gives you the fund menu your employer picked, usually a couple of dozen options and a target-date series you had no say in. Where the menu is good you're buying at wholesale prices you couldn't get on your own. Where it's bad you're stuck with it. Nothing lets a current employee take plan money somewhere cheaper. An IRA has no menu at all, which is either freedom or rope, depending on the person holding it.

Fees. Plans charge administrative fees on top of fund expenses, sometimes shown on the statement and sometimes not. Read the annual fee disclosure, then price the same fund inside an IRA, because over thirty years the gap compounds into real money.

Creditors. A 401(k) is an ERISA plan and its protection from creditors is about as strong as US law provides. An IRA is shielded in bankruptcy only up to a federal ceiling that moves with inflation, and outside bankruptcy the answer comes from your state, where it ranges from total protection to almost none. That needs a lawyer in your state.

Match first, then the IRA, then back to the plan

Whether the IRA half of that order is open to you depends on your income, which is the one test a 401(k) never applies. Both IRA income tests are set out here, along with what they actually restrict.

None of this is advice. It's where most people end up once the match, the IRA income test and the cost of the plan menu are all on the table, and every step has a reason attached.

1. The 401(k) up to the full employer match. No other step pays a guaranteed return on the day the money lands.
2. The Roth IRA, if your income lets you have one. Wider and usually cheaper investment choice, and your own contributions stay reachable.
3. Back to the 401(k), as far as your budget stretches, up to the $24,500 ceiling.

Whether the plan half of that should be Roth or pre-tax is a separate question, and it turns on one number: your tax rate now against your tax rate in retirement. The Roth versus traditional calculator settles that with your own figures, and the contribution limits page carries every ceiling that applies to either account.

Conversions, inherited accounts and state tax sit outside this page

Roth conversions and the tax bill they trigger; backdoor contributions; the mega-backdoor route through after-tax plan money; the pro-rata rule on traditional IRA balances you already hold; inherited Roth accounts under the ten-year rule for beneficiaries; state tax treatment; and the way a Roth balance feeds into Medicare IRMAA surcharges. Every one of those turns on facts about you that a general page can't see. I'd sooner leave them out than guess.

Frequently asked questions

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

Yes. They're separate limits and filling one doesn't touch the other. For 2026 that's up to $24,500 of salary deferrals into the 401(k) plus $7,500 into the IRA, subject to the Roth IRA income test. Most people who can afford both should do both.

Which should I fund first?

Fund the 401(k) at least up to the full employer match, because that money exists nowhere else. After that the Roth IRA is usually the better next dollar: cheaper and wider investment choice, and your own contributions stay available at any age. Then back to the plan.

Is there an income limit on a Roth 401(k)?

No, none at all, which is why it's often the only Roth account a high earner can fund directly. The IRA is where the test lives. It phases out between $153,000 and $168,000 of modified AGI for single filers, and between $242,000 and $252,000 filing jointly.

Does my employer match go into the Roth account?

Normally not. Employer money keeps its own tax status: untaxed going in, taxable coming out, whichever box you ticked for your own deferrals. SECURE 2.0 lets a plan pay the match as Roth instead, but the plan has to choose that, and then the amount is taxable income to you in the year you receive it, and plenty of plans still haven't taken that up. Check your plan document.

Can I take my contributions out of a Roth 401(k) like I can from a Roth IRA?

No, and this is the difference that surprises people most. A Roth IRA lets you withdraw your own contributions at any age, tax-free and penalty-free, because contributions come out first. A Roth 401(k) has no ordering rule, so any distribution before you qualify is split proportionally between contributions and earnings, and the earnings share is taxed and usually carries the 10% penalty.

Do Roth accounts have required minimum distributions?

Neither does now. A Roth IRA never required them from the original owner, and SECURE 2.0 removed them from Roth 401(k)s starting in 2024. Before that change, rolling a Roth 401(k) into a Roth IRA at retirement was the standard way to escape RMDs. That reason has gone, though others to roll over remain.