401(k) vs IRA
A 401(k) is offered through an employer with a much higher yearly limit and often a company match. An IRA is opened on your own and usually offers more investment choices but a lower limit.
Advertisement
401(k) versus IRA
They can be used together. A common order is: contribute to the 401(k) up to the match, then max out an IRA, then return to the 401(k).
Limits from IRS for 2026; verify on irs.gov
| 401(k) | IRA | |
|---|---|---|
| Who offers it | Your employer | You open it at a brokerage or bank |
| 2026 contribution limit | $24,500 (+ catch-up) | $7,500 (+ catch-up) |
| Employer match | Often | No |
| Investment choices | A menu chosen by the plan | Almost anything |
| Income limits for Roth | None for Roth 401(k) | Roth IRA has income limits |
What to do first
- Contribute enough to the 401(k) to get the full employer match.
- Then consider an IRA for lower fees and more choices.
- Then increase 401(k) contributions toward the limit.
Sources and further reading
Questions people ask
Can I have a 401(k) and an IRA?
Yes. You can contribute to both in the same year, within each limit, though deductibility of traditional IRA contributions can depend on your income when you have a workplace plan.
Results are estimates for information only, not financial advice. Read the full disclaimer.
More free calculators
🚗Auto Loan PaymentsMonthly car loan payments💳Personal Loan PaymentsMonthly personal loan payments🧾Credit Card and Debt PayoffTime and interest to clear debt🏦Savings GrowthMonthly saving, interest and goals🏠Rent AffordabilityHow much rent you can afford⚡Energy and Running CostsAppliances and EV charging
Advertisement