The 2026 limits
| 401(k), 403(b) | IRA | |
|---|---|---|
| Yearly limit | $24,500 | $7,500 |
| Extra from age 50 | $8,000 | $1,100 |
| Extra at ages 60 to 63 | $11,250 (instead of $8,000) | – |
The 401(k) limit covers traditional and Roth together, and so does the IRA limit. If you earned over $150,000 from your employer last year, your 401(k) catch-up contributions must go in as Roth.
Income limits
A Roth 401(k) has no income limit. A Roth IRA does: you can put in less as your income rises, and nothing above these amounts (modified AGI, 2026):
| Filing status | Contributions shrink from | None from |
|---|---|---|
| Single or head of household | $153,000 | $168,000 |
| Married filing jointly | $242,000 | $252,000 |
Anyone can put money in a traditional IRA, but if you’re covered by a workplace plan, the tax deduction phases out between $81,000 and $91,000 (single) or $129,000 and $149,000 (married filing jointly). If only your spouse is covered, it’s $242,000 to $252,000.
What you save now
A traditional contribution saves tax at your top federal rate, plus state tax in most states. Single and earning $75,000, you’re in the 22% bracket, so a $5,000 traditional 401(k) contribution cuts your federal tax by $1,100. Social Security and Medicare are still charged on it.
Which leaves you with more?
Take $5,000 of pay, invested for 25 years at 6% a year, with a 22% tax rate today:
- Roth: you pay the tax first, so $3,900 goes in. It grows to $16,738, all tax-free.
- Traditional: all $5,000 goes in. It grows to $21,459, then it’s taxed when you take it out.
| Your tax rate in retirement | Traditional, after tax | Roth |
|---|---|---|
| 12% | $18,884 | $16,738 |
| 22% | $16,738 | $16,738 |
| 32% | $14,592 | $16,738 |
With the same tax rate now and later, they come out exactly the same. Traditional only wins if your rate in retirement is lower, and only if you invest the tax you saved.
Try your own rates:
Traditional leaves you more, after tax
$2,146 more
- Roth22% tax now, none later
- $16,738
- TraditionalNo tax now, 12% when it comes out
- $18,884
Federal income tax only. Assumes the whole $5,000 goes into the traditional account, which is the same as investing the tax you save.
When Roth makes more sense
- You’re early in your career, or in the 10% or 12% bracket now.
- You expect a higher income, or higher tax rates, later.
- You want flexibility: you can take out what you put into a Roth IRA (not the growth) at any time, without tax or penalty.
- You want to avoid required withdrawals: Roth IRAs and Roth 401(k)s have none. Traditional accounts must start paying out at 73 (75 if you were born in 1960 or later).
When traditional makes more sense
- You’re in the 24% bracket or higher, and expect a lower income in retirement.
- You want to lower your taxable income now, for example to qualify for credits or deductions that shrink as income rises.
Many people split their contributions between the two, so they have both taxable and tax-free money to draw on later. Whichever you choose, put in at least enough to get your employer’s full match. The match usually goes in as traditional (pre-tax), even if you choose Roth.
A note on state tax
Most states follow the federal treatment, but Pennsylvania taxes traditional 401(k) contributions, and New Jersey taxes 403(b) and 457(b) contributions, so there’s no state tax saving on those now.
See your own numbers
The 401(k) calculator shows what your account could grow to, with your employer’s match. The paycheck calculator shows how a traditional contribution changes your take-home pay. Already have money in a traditional account? The Roth conversion calculator shows the tax on moving some of it to a Roth.