Roth IRA vs 401(k): Where to Invest First

The phrase “Roth IRA vs 401(k)” makes it sound like you must choose one account and reject the other, but for most people the honest answer is that you use both, in a specific order, and the order is what actually matters. A 401(k) is the retirement plan your employer offers, often with free matching money attached, while a Roth IRA is an individual account you open on your own with a wider menu of investments and tax-free growth. They are not rivals so much as two tools that do different jobs, and knowing which one earns your next dollar is the whole game.

This breakdown lays out Roth IRA vs 401(k) from the ground up: what each account really is, how the employer match works and why it usually decides where to invest first, how the pre-tax and after-tax treatments differ, the separate contribution limits, the Roth IRA income limits a 401(k) does not have, the investment choice and fees inside each, and the classic priority order of funding the 401(k) to the match, then maxing a Roth IRA, then returning to the 401(k). It sits alongside our note on how much you need to retire, which sets the target these accounts are filling, and our retirement savings by age checkpoints. Bring your own numbers to the companion below or our calculator as you read. Every dollar figure here is illustrative arithmetic, general information and education rather than advice, and nothing below is a recommendation to buy any security, fund, or account.

What Roth IRA vs 401(k) really compares

The comparison people mean when they say “Roth IRA vs 401(k)” is a little tangled, because the two terms are not the same kind of thing. A 401(k) is a type of account, defined by its employer sponsorship and its place in the tax code, and it can itself be either traditional (pre-tax) or Roth (after-tax) depending on what your plan offers. A Roth IRA is also a type of account, an individual retirement arrangement, and “Roth” describes its tax treatment. So the cleanest way to read the question is as a matchup between an employer-sponsored plan and an individual account, with the tax label as one of several moving parts.

Once you frame it that way, the decision stops being a contest to crown a single winner. You are not asking which account is objectively best and then pouring everything into it. You are asking a sequencing question: given a fixed amount you can invest each month, which account should receive the first dollars, which should receive the next, and why. That sequencing turns on a few concrete features, the employer match, the tax treatment, the contribution limits, the income limits, and the investment costs, and the rest of this breakdown takes each of those apart so the order falls out naturally.

The 401(k): your workplace retirement plan

A 401(k) is a retirement plan your employer sets up and you contribute to directly from your paycheck, before the money ever reaches your bank account. Because the contributions come out of payroll automatically, a 401(k) is one of the most frictionless ways to save: you decide on a percentage of pay once, and the plan quietly diverts it every period without you lifting a finger. The signature feature, and the reason it usually leads the priority order, is that many employers add matching money on top of what you contribute, up to some limit tied to your salary.

The trade-offs come from the fact that the plan is chosen by your employer, not by you. You invest from a fixed menu of options the plan administrator selected, which may be excellent or may be mediocre and expensive, and you cannot shop the whole market the way you can in an individual account. A traditional 401(k) is funded with pre-tax dollars, lowering your taxable income now, with the tax paid when you withdraw in retirement. Many plans now also offer a Roth 401(k), which flips that to after-tax contributions and tax-free qualified withdrawals. The account travels with your career: when you leave a job, the balance is yours to keep, roll over, or move.

The Roth IRA: your individual account

A Roth IRA is an individual retirement account you open yourself at a brokerage, with no employer involved. Because you set it up on your own, you control everything about it: which brokerage holds it, and which investments fill it, from broad index funds to individual stocks to bonds. That freedom is the Roth IRA’s headline advantage over most 401(k) plans, whose menus are fixed. You fund it with after-tax dollars, money you have already paid income tax on, and in exchange the account grows tax-free, with qualified withdrawals in retirement taxed at nothing at all.

That tax-free treatment is powerful precisely because it applies to the growth, not just the contributions. Decades of compounding inside a Roth IRA are never taxed on a qualified withdrawal, which is especially valuable if you expect to be in a similar or higher tax bracket later, or simply value the certainty of a pot of money the government has no further claim on. The catch is that a Roth IRA carries a lower annual contribution limit than a 401(k), and it has income limits that can reduce or block direct contributions for higher earners, two constraints the workplace plan does not share. Our note on how dividends are taxed shows how much the account location changes the after-tax result on the income side.

The employer match: why the 401(k) comes first

The single feature that most reliably decides where to invest first is the employer match, and it belongs to the 401(k) alone. A match is additional money your employer contributes to your 401(k) based on what you put in, commonly expressed as something like “50 cents on the dollar up to 6 percent of pay” or “dollar for dollar up to a limit.” Whatever the exact formula, the effect is the same: for every dollar you contribute up to the match threshold, the employer adds a set amount, which is an immediate return on your contribution that no other account, including a Roth IRA, can offer.

That is why the standard advice puts the 401(k) first, but only up to the point that captures the full match. Contributing enough to earn every matching dollar is close to the only guaranteed high return in investing, because the boost happens the instant the money lands, before any market growth. Leaving the match on the table by contributing too little is, in plain terms, declining part of your compensation. Once you have contributed enough to capture the full match, the match’s job is done, and the case for continuing to pour money into the 401(k) ahead of a Roth IRA weakens, which is exactly why the priority order pivots to the Roth IRA next.

How the tax treatment differs

Taxes are the axis on which most of the Roth IRA vs 401(k) distinction turns, so it helps to state it plainly. A traditional 401(k) is funded with pre-tax dollars: the contribution is subtracted from your taxable income in the year you make it, giving you a tax break now, and then both the contributions and their growth are taxed as ordinary income when you withdraw in retirement. You are, in effect, deferring the tax to later. A Roth IRA is the mirror image: you contribute after-tax dollars with no deduction now, and in exchange qualified withdrawals in retirement, including all the growth, are entirely tax-free.

The practical question this raises is whether you would rather pay the tax now or later, which depends on your tax rate today versus in retirement, something none of us knows for certain. A common rule of thumb is that a Roth benefits you more when you expect your future tax rate to be similar to or higher than today’s, while a pre-tax deduction helps more when you expect a lower rate later. Because the future is unknowable, many people value holding both types, pre-tax in the 401(k) and after-tax in the Roth IRA, so that some of their retirement income is taxable and some is not. This tax diversification is a feature, not indecision, and it is one more reason the priority order uses both accounts rather than picking a single winner.

Contribution limits for each account

The two accounts have separate annual contribution limits, and the separation is what makes using both possible: a dollar in your 401(k) does not reduce what you can add to a Roth IRA. The 401(k) carries the much higher employee contribution limit of the two, which is one reason it can absorb large savings once the match is captured. The Roth IRA limit is considerably lower, which is part of why it is used as a focused middle step rather than the sole destination for a big saver.

Because both limits are adjusted for inflation over time, any exact figure is a moving target, so treat the following as illustrative and confirm the current IRS numbers before you plan around them. As commonly cited recent illustrations, employee 401(k) contributions have been capped in the low twenty-thousands of dollars a year, while a Roth IRA has been capped near seven thousand dollars a year for savers under fifty. Both accounts allow additional catch-up contributions once you turn fifty, letting older savers add more. The gap between the two limits shapes the whole priority order: a modest saver may never exhaust even the Roth IRA limit, while a high saver will fill the Roth IRA and still have room to return to the 401(k), which is exactly the third step of the sequence.

Roth IRA income limits and the phase-out

Here is a constraint the 401(k) does not impose: a Roth IRA has income limits. Above certain levels of income, the amount you may contribute directly to a Roth IRA phases down, and above a higher level it reaches zero, so the highest earners cannot contribute to a Roth IRA the ordinary way at all. The thresholds depend on your tax filing status, single, married filing jointly, and so on, and on your modified adjusted gross income, and they are adjusted over time, so the current figures must be confirmed with the IRS rather than assumed from memory.

Within the phase-out range, you are not simply cut off; you can contribute a reduced amount that shrinks as your income rises through the range. A 401(k), by contrast, has no income ceiling on eligibility at all, which is a big part of why higher earners often lean more heavily on the workplace plan and why the priority order can look different at the top of the income scale. For those who exceed the Roth IRA limits entirely, a Roth 401(k) at work (which has no income limit) or more complex strategies can preserve some Roth exposure, but those get into tax territory where a professional’s help is genuinely worth it. Confirm the current thresholds for your own filing status before assuming you qualify for the full amount.

The classic priority order, step by step

With the pieces on the table, the widely cited priority order for where to invest first assembles itself, and it is worth stating as a clean sequence. First, contribute to the 401(k) up to the point that captures the full employer match, because that match is an immediate return available nowhere else. Second, redirect your next dollars to a Roth IRA and work toward maxing it out, taking advantage of its wider investment choice, typically lower fees, and tax-free growth. Third, if you still have money to invest after maxing the Roth IRA, return to the 401(k) and keep contributing there, up to its higher limit.

The logic behind the ordering is that each step captures the best remaining advantage in turn. Step one grabs the free match. Step two captures the account with the most flexibility and often the lowest costs, plus tax-free withdrawals, before the workplace plan’s constraints apply again. Step three uses the 401(k)’s large remaining capacity once the more attractive Roth IRA room is full. This is a general framework rather than a personalized prescription, and there are sensible reasons to deviate, covered later, but for a great many savers this three-step order is a reliable default. The companion below lets you split your own monthly amount across these three steps and see the free match you capture.

Step one: the 401(k) up to the full match

The first dollars go into the 401(k), but only as far as the full match reaches, and understanding your specific match formula is the key to sizing this step. If your employer matches 50 cents per dollar up to 6 percent of pay, then contributing 6 percent of your salary captures the entire match; contributing less leaves some of it behind, and contributing more into the 401(k) at this stage earns no additional match. The goal of step one is narrow and precise: put in exactly enough to trigger every matching dollar available to you, no less.

Getting this step right is arguably the highest-value move in the whole sequence, because the match is a return you receive immediately and with certainty, independent of how markets behave. On an illustrative salary of 70,000 dollars with a 50 percent match up to 6 percent of pay, contributing the 4,200 dollars needed earns roughly 2,100 dollars of employer money, an instant boost of about 21 percent on your own contribution before a single day of market growth. Skipping it is leaving that 2,100 dollars unclaimed each year. Because match formulas vary widely, read your plan’s exact terms and set your contribution percentage to capture the full match, then move on to the next step rather than overfilling here.

Step two: max out the Roth IRA

Once the match is captured, the standard order sends your next dollars to a Roth IRA, and there are several reasons it earns the second slot ahead of adding more to the 401(k). The Roth IRA usually offers a far wider investment menu than a workplace plan, letting you choose low-cost broad index funds directly rather than settling for whatever the plan lists. Its fees are frequently lower, since you are not confined to the plan’s chosen funds and any administrative costs layered on top. And its qualified withdrawals are tax-free, giving your retirement income a tax-free component to balance the taxable withdrawals a traditional 401(k) will produce.

Maxing the Roth IRA means contributing up to its annual limit, subject to the income limits discussed earlier. For a saver whose income sits below the phase-out, this step is straightforward: direct contributions until the limit is reached. For those inside or above the phase-out range, the direct route narrows or closes, which is where a Roth 401(k) or professional guidance enters the picture. The reason this step matters so much is that Roth IRA room does not roll over: an annual limit missed is gone, so filling it each year while you are eligible is how you build a meaningful tax-free balance over time. Our walkthrough on how to invest in index funds covers exactly the kind of low-cost holdings that fit naturally inside a Roth IRA.

Step three: back to the 401(k)

If you still have money to invest after capturing the match and maxing the Roth IRA, the sequence loops back to the 401(k) for step three. This is where the workplace plan’s higher contribution limit becomes an asset: having filled the smaller Roth IRA, you now have a large remaining runway inside the 401(k) to keep saving in a tax-advantaged account. The match is already captured and does not grow with these additional dollars, but the tax advantages of the account, whether pre-tax deferral or Roth 401(k) treatment, still apply to everything you add up to the plan’s limit.

Reaching step three is a marker of a strong saving rate, because it means your annual investing exceeds the match threshold plus the entire Roth IRA limit combined. Many savers never get this far, and that is fine; the order is designed so that even someone who only completes steps one and two has captured the two most valuable advantages. For those who do reach step three, the 401(k)’s capacity lets a serious saver shelter a large amount each year. Beyond even a fully funded 401(k), additional savings typically flow to a taxable brokerage account, where our note on tax-loss harvesting becomes relevant, but that is past the scope of the core three-step order.

Investment choice and fees in each

Beyond taxes and matches, a quieter difference between the accounts is what you can invest in and what it costs, and it favors the Roth IRA often enough to reinforce its place in the order. A 401(k) restricts you to a menu the plan selected, which might be a handful of funds or a broader lineup, and those funds can carry higher expense ratios than what you could find shopping the open market, sometimes with an extra layer of plan administration fees on top. A good plan offers cheap, broad index options; a weaker one offers only pricier actively managed funds, and you are stuck with the menu.

A Roth IRA hands you the whole market. You can hold the lowest-cost broad index funds available, individual stocks and bonds, and nearly anything a brokerage offers, choosing purely on merit and cost. Because fees compound against you the same way returns compound for you, the ability to pick genuinely low-cost funds inside a Roth IRA can add up to real money over decades, which is part of the case for filling it before returning to a possibly more expensive 401(k). The honest caveat is that some 401(k) plans are excellent and cheaper than a carelessly built Roth IRA, so compare the actual fund costs in your specific plan rather than assuming, and let cost, as our comparison on index funds vs ETFs stresses, guide the specific funds you choose inside whichever account.

What the employer match is worth over time

It is easy to underrate the match because a single year’s matching dollars look modest next to a whole retirement goal. The reveal comes from letting those matching dollars compound alongside everything else for decades, because the match is not a one-time bonus but an annual addition that grows for as long as it stays invested. To make it concrete, take the illustrative 2,100 dollars of annual employer match from the earlier example and let it grow on its own at an assumed 7 percent, ignoring your own contributions entirely, just to isolate what the free money becomes.

The shape of that chart is the entire argument for treating step one as non-negotiable. In the first decade the accumulated match is real but unremarkable; by four decades it has swollen into a figure larger than many people’s entire retirement contributions, and every dollar of it came from the employer rather than your own pocket. Notice this ignores your own contributions completely: it is the growth of the free money alone. Declining the match to invest elsewhere first cannot be justified, because no other account replaces a guaranteed immediate addition to your balance. Run your own salary and match formula through the companion below to see what your specific match compounds toward.

Where each dollar goes in the priority order

To see the sequence in action, put an illustrative saver on it. Suppose they can invest 2,000 dollars a month, or 24,000 dollars a year, earn 70,000 dollars, and have a 50 percent match up to 6 percent of pay. Step one sends 4,200 dollars to the 401(k) to capture the full match. Step two sends the next 7,000 dollars, an illustrative Roth IRA limit, to the Roth IRA. Step three returns the remaining 12,800 dollars to the 401(k). The chart below shows how that single annual amount divides across the three tiers.

The split makes the design of the order visible. A saver contributing less than 4,200 dollars a year fills only part of tier one and never reaches the Roth IRA, which is why capturing at least the full match is the first priority for everyone. A saver contributing between the match threshold and the match plus the Roth IRA limit completes tiers one and two and stops there. Only a saver whose annual amount exceeds both combined reaches the third tier and returns to the 401(k). Your own split depends on your salary, match formula, and how much you invest, so adjust those in the companion below to see where your dollars land across the three steps.

Traditional vs Roth inside the 401(k)

A wrinkle that trips people up is that “Roth” is not exclusive to the IRA: many 401(k) plans now offer a Roth 401(k) option alongside the traditional pre-tax one. A Roth 401(k) applies the Roth tax treatment, after-tax contributions and tax-free qualified withdrawals, but inside the workplace plan, which means it uses the higher 401(k) contribution limit and, crucially, has no income limit on eligibility. That last point matters for high earners who are shut out of a direct Roth IRA: a Roth 401(k) can give them Roth-style tax-free growth at the larger limit without the income ceiling.

One detail to know is that even when you contribute to the Roth side of a 401(k), the employer match itself typically goes into the pre-tax side of the account, so a matched Roth 401(k) saver ends up with both tax treatments automatically. Choosing between traditional and Roth inside the 401(k) comes back to the same pay-tax-now-or-later question as the IRA: Roth suits those who expect similar or higher future tax rates or who value tax-free income later, while pre-tax suits those who want the deduction now and expect a lower rate in retirement. Many savers deliberately hold some of each. If your plan offers a Roth 401(k), it can reshape the priority order, since you may be able to get Roth treatment at the workplace limit rather than routing solely through a Roth IRA.

Can you have both a Roth IRA and a 401(k)?

Yes, having both a Roth IRA and a 401(k) is not only allowed but is the backbone of the entire priority order, and the two do not interfere with each other’s limits. Contributing to a 401(k) at work does not use up any of your Roth IRA room, and funding a Roth IRA does not reduce your 401(k) capacity, because each account carries its own separate annual limit. This is precisely what lets the standard sequence use all three tiers: the match inside the 401(k), a fully funded Roth IRA, and a return to the 401(k), all in the same year.

The one real interaction to keep in mind is the Roth IRA income limit, which can be affected by your overall income but not by your 401(k) contributions as such, and a subtle point that being an active participant in a workplace plan can affect the deductibility of a separate traditional IRA (a different account from the Roth). For the core Roth IRA and 401(k) pairing, though, the practical takeaway is simple: you can and generally should use both, in the order laid out here, as long as your income keeps you eligible to contribute directly to the Roth IRA. Confirm the current income thresholds, and if you are near or above them, look at the Roth 401(k) or professional guidance rather than assuming you are locked out of Roth treatment entirely.

When to deviate from the standard order

The three-step order is a strong default, not a law, and a few situations reasonably change it. If your 401(k) plan is unusually poor, offering only expensive funds with high administrative fees, some savers capture the match and then skip the third step entirely, sending any money beyond the Roth IRA to a low-cost taxable account instead of a costly plan. Conversely, if your plan is excellent and cheaper than what you would build in an IRA, you might weight it more heavily. If your employer offers no match at all, the reason the 401(k) leads the order disappears, and many people start with the Roth IRA instead, weighing the plan’s costs against the IRA’s flexibility.

High earners above the Roth IRA income limits are the other common deviation, since the direct Roth IRA step is unavailable to them and they lean on the Roth 401(k) or more advanced strategies. Someone carrying high-interest debt has an even earlier priority, because paying off a balance charging more than any expected investment return is a guaranteed return that usually comes before all of this, a point our note on how to start investing for beginners makes about getting the foundation right first. And anyone without an emergency cushion generally builds that before maximizing retirement accounts, so the money is not trapped when life happens. The order assumes a stable base; adjust it to your real circumstances, and take genuinely complex cases to a professional.

Early access and withdrawal rules

Because both accounts are built for retirement, pulling money out early generally triggers taxes and a penalty, but the two differ in ways worth knowing before you need the cash. A Roth IRA has a genuinely useful flexibility: you can withdraw your own contributions, the after-tax dollars you put in, at any time without tax or penalty, since you already paid tax on them, though taking out the earnings early can trigger both tax and a penalty. That makes the Roth IRA modestly more accessible in an emergency than many people assume, a quiet secondary benefit of its structure.

A 401(k) is typically more locked up. Early withdrawals are usually taxed and penalized unless a specific exception applies, though some plans allow loans against the balance that you repay to yourself, and separating from the employer can open certain options. The important framing for either account is that early access, while possible, is expensive in a way the immediate cash disguises: every dollar withdrawn early is a dollar that stops compounding, and the lost future growth typically dwarfs the penalty. Treat both accounts as long-term vehicles, keep a separate emergency fund so you are not tempted to raid them, and confirm the current exception rules, which are detailed and change, before withdrawing anything early.

Roth IRA vs 401(k): a side by side comparison

It helps to see the distinctions in one place. The table below summarizes how a Roth IRA and a traditional 401(k) compare on the features that actually drive the priority order. Read it as general orientation rather than a rule, because specific plans, limits, and income thresholds vary and change, so confirm the current figures for your own situation.

The pattern in the table is the one this breakdown keeps returning to: the 401(k) leads with the match and finishes with its large capacity, while the Roth IRA sits in the middle for its flexibility, low cost, and tax-free growth. Neither account dominates the other across every row, which is exactly why the sensible answer to “Roth IRA vs 401(k)” is almost always “both, in order,” rather than a single winner.

A worked example: one saver, one plan

Put the whole sequence on one illustrative saver. They earn 70,000 dollars, can invest 800 dollars a month (9,600 dollars a year), and have a 50 percent match up to 6 percent of pay. Step one: they contribute 4,200 dollars to the 401(k), the 6 percent of pay that captures the full match, and the employer adds roughly 2,100 dollars, an instant 21 percent boost on that slice. Step two: the remaining 5,400 dollars goes into a Roth IRA, comfortably under the illustrative 7,000 dollar limit, so they never reach step three this year. Their first-year total working for them is about 11,700 dollars, including the free match.

Now let the match do its quiet work over time. That roughly 2,100 dollars of annual employer money, compounding at an assumed 7 percent alongside everything else, adds close to 29,000 dollars to the balance over a single decade compared with an identical saver who declined the match, and far more over a full career. Same salary, same 9,600 dollars of personal contributions, same market: the only difference is whether the free match was captured. This is why the order leads with the match and why the worked number is so lopsided in its favor. Run your own salary, monthly amount, and match formula through the companion below to see your version of this split and the match it captures.

Common mistakes with Roth IRA vs 401(k)

A handful of errors show up whenever people weigh these two accounts, and each is easy to sidestep once named:

• Leaving the employer match on the table. Contributing too little to capture the full match forfeits free money and the decades of compounding on it. This is the single most costly mistake, and step one exists to prevent it.
• Treating it as an either-or choice. Roth IRA vs 401(k) is not a contest to pick one account. The two have separate limits and different strengths, and the standard order deliberately uses both.
• Ignoring the Roth IRA income limits. Assuming you can contribute the full Roth IRA amount regardless of income can lead to an excess contribution that must be corrected. Confirm the current thresholds for your filing status.
• Overfilling the 401(k) before the Roth IRA. Pouring everything into the 401(k) past the match, before touching a Roth IRA, often means settling for a narrower menu and higher fees than the IRA would offer, and skipping tax-free growth.
• Confusing a Roth 401(k) with a Roth IRA. They share the Roth tax treatment but differ in limits, income rules, and investment choice. Mistaking one for the other muddles the plan.
• Raiding the accounts early. Withdrawing before retirement, even from the more accessible Roth IRA contributions, sacrifices the compounding that makes these accounts work. Keep a separate emergency fund instead.

Each mistake comes from treating one feature of the comparison as the whole of it. Weigh the match, the tax treatment, the limits, the income rules, and the fees together, and the order usually makes itself.

How to set it up in practice

Turning the framework into action is a short, concrete sequence. First, find your 401(k) match formula, usually in your plan documents or from human resources, and set your contribution percentage to the level that captures the full match, no less. That one step secures the highest-value part of the whole plan. Second, if you do not already have one and your income allows, open a Roth IRA at a low-cost brokerage, which our note on how to open a brokerage account walks through, and set up an automatic monthly contribution toward its annual limit.

Third, choose simple, low-cost investments inside each account, commonly a broad index fund or two, so your money is actually invested rather than sitting as cash, and so fees do not quietly erode the balance. Fourth, if you still have money to invest after the match and a maxed Roth IRA, raise your 401(k) contribution to use its remaining capacity. Fifth, automate everything and revisit once a year, adjusting your contribution as your income grows and confirming the current limits, which change over time. None of this requires predicting markets or timing anything; it requires setting the order once and letting automation and time carry it. The companion or our calculator lets you test your own salary, contribution, and match as you build the plan.

The bottom line

Roth IRA vs 401(k) is rarely a choice between two rivals; for most people it is a question of order, and the widely cited order is clear: fund the 401(k) up to the full employer match, then max a Roth IRA, then return to the 401(k) if you can. The 401(k) leads because the match is free money and an immediate return no other account offers, illustratively adding close to 29,000 dollars over a decade on a 2,100 dollar annual match, and far more across a career. The Roth IRA takes the second slot for its wider investment choice, typically lower fees, and tax-free qualified withdrawals. The 401(k) returns for step three because its higher limit gives a strong saver the most remaining room.

The two accounts have separate contribution limits and opposite tax timing, pre-tax now and taxed later for a traditional 401(k), after-tax now and tax-free later for a Roth IRA, and holding both spreads your future tax exposure rather than betting on a single guess. Watch the Roth IRA income limits that a 401(k) does not have, know that a Roth 401(k) can give high earners Roth treatment at the workplace limit, and remember you can use both accounts in the same year without one crowding out the other. Treat every figure here as illustrative, confirm the current IRS limits and income thresholds, and the Roth IRA vs 401(k) question stops being a puzzle and becomes a simple sequence you set once and let run.

Dividora publishes for readers who would rather understand the machinery than follow a slogan, and this breakdown is exactly that: general information and education, not financial, tax, or investment advice, and not a recommendation to open or contribute to any specific account, plan, or fund. Every salary, contribution, match, limit, return, and dollar figure above is an illustrative planning device rather than a forecast or a promise; the worked examples assume a steady gross return to isolate the effect of the match and the ordering, which no real market delivers in a straight line, and any account invested in the market can lose value, sometimes for long stretches. Contribution limits, income thresholds, matching formulas, and withdrawal rules vary by plan and by year and are set by the IRS and your employer, so confirm the current official figures before acting on any number here. Whether a traditional or Roth treatment, which account order, and how much to contribute suit you depends on your income, tax situation, and goals; before committing real money, take your circumstances to a qualified financial or tax professional who can weigh them against your situation.