401(k) vs IRA vs Roth: Which Should You Use?

The alphabet soup of retirement accounts comes down to a few questions: who offers it, when you get the tax break, and when you can access the money. Here's how the big three compare.

401(k)

Offered through employers, with high contribution limits and often an employer match — free money you should always capture first. Traditional 401(k) contributions are pre-tax, lowering your taxable income now; you pay tax on withdrawals in retirement.

Traditional vs Roth

• Traditional (401(k) or IRA) — contribute pre-tax, pay tax on withdrawals. Good if you expect a lower tax rate in retirement.
• Roth (IRA or 401(k)) — contribute after-tax, withdrawals are tax-free. Good if you expect a higher rate later, or want tax-free growth.
• IRAs are opened by you (not tied to an employer) with lower limits but more investment choice.

A common order

Many people contribute enough to a 401(k) to get the full match, then fund a Roth IRA, then return to the 401(k) for the remaining budget. Project any of these accounts with the calculators below.