401(k) vs IRA Calculator

Compare retirement accounts to maximize your savings

Choosing between a 401(k) and IRA, and deciding between Traditional (tax-deferred) and Roth (tax-free) versions, is one of the most important retirement planning decisions. This calculator compares all four account types side-by-side, factoring in employer matching, tax implications, and long-term growth to show you which strategy maximizes your after-tax retirement wealth.

Open Source & Transparent

All calculations are open source and verifiable on GitHub. We believe in transparency and welcome contributions to improve our tools.

Recommended Account

Roth 401kexcellent choice

$1,665,976

After-tax value at retirement (age 65)

Pre-Tax Value

$1,665,976

Your Contributions

$210,000

Employer Match

$765,448

Your Information

35 years until retirement

$
$

Annual: $6,000

Employer 401(k) Match

%

e.g., 100% = $1 for every $1 you contribute

%

Max employer will match (up to $5,100/year)

Tax Rates

%

Federal marginal rate (10, 12, 22, 24, 32, 35, 37%)

%

Often lower than current (less income in retirement)

All Account Types

Traditional 401k

Tax-deferred

After-Tax Value:$1,416,079
Pre-Tax Value:$1,665,976
Employer Match $765,448
Tax Savings Now:$46,200
Best Choice

Roth 401k

Tax-free growth

After-Tax Value:$1,665,976
Pre-Tax Value:$1,665,976
Employer Match $765,448

Traditional IRA

Tax-deferred

After-Tax Value:$765,448
Pre-Tax Value:$900,527
Tax Savings Now:$46,200

Roth IRA

Tax-free growth

After-Tax Value:$900,527
Pre-Tax Value:$900,527

2025 Contribution Limits

Maximum annual contributions allowed

401(k) Limit:$23,500
IRA Limit:$7,000
Your Annual Contribution:$6,000

Summary

Years to Retirement

35

Total Contributions

$210,000

Free Money (Employer Match)

$765,448

Smart Strategy

Optimize your savings

Always contribute at least 6% to 401(k) to get full employer match

Traditional accounts save you more now (higher current tax bracket)

Consider tax diversification: use both Traditional and Roth accounts

Experts recommend saving 15% of income ($12,750/year) for retirement

Tax Insight

Traditional Advantage

Your current tax rate (22%) is higher than your expected retirement rate (15%). Traditional accounts let you defer taxes to when your rate is lower.

Understanding 401(k) vs IRA: Which is Right for You?

Both 401(k) plans and IRAs offer tax advantages for retirement savings, but they differ significantly in contribution limits, tax treatment, and flexibility. The right choice depends on your income, tax situation, and whether your employer offers matching contributions.

The Four Account Types

Feature Traditional 401(k) Roth 401(k) Traditional IRA Roth IRA
2025 Limit $23,500 $23,500 $7,000 $7,000
Tax on Contributions Deductible After-tax Deductible* After-tax
Tax on Growth Deferred Tax-free Deferred Tax-free
Tax on Withdrawals Taxed as income Tax-free Taxed as income Tax-free
Employer Match Yes Yes No No
Income Limits None None Deduction limits* Yes

*Traditional IRA deductions may be limited if you or your spouse have a workplace retirement plan and earn above certain thresholds.

The Employer Match Advantage

The single biggest advantage of 401(k) plans is employer matching. A typical match is 50-100% of your contributions up to 3-6% of your salary. This is an immediate 50-100% return on your money—far better than any investment could reliably deliver.

Golden Rule

Always contribute at least enough to get the full employer match before considering other retirement accounts. It's the closest thing to free money you'll find.

Traditional vs Roth: The Tax Question

The choice between Traditional and Roth depends primarily on when you expect to pay less in taxes:

Choose Traditional If...

  • • You're in a high tax bracket now
  • • You expect lower income in retirement
  • • You want to reduce taxable income today
  • • You're at peak earning years (40s-50s)

Choose Roth If...

  • • You're in a lower tax bracket now
  • • You expect higher taxes in retirement
  • • You want tax-free growth and withdrawals
  • • You're early in your career (20s-30s)

The Optimal Contribution Strategy

Here's the widely recommended priority order for retirement contributions:

  1. 1

    401(k) to employer match

    Contribute enough to get full matching—don't leave free money on the table

  2. 2

    Max out Roth IRA

    Take advantage of tax-free growth and more investment options ($7,000/year)

  3. 3

    Back to 401(k)

    If you can save more, increase 401(k) contributions toward the $23,500 limit

  4. 4

    Taxable accounts

    If you max out retirement accounts and still have savings, use regular investment accounts

2025 Contribution Limits

401(k) Plans

Standard limit: $23,500
Catch-up (50+): +$7,500
Super catch-up (60-63): +$11,250
Max (age 60-63): $34,750

IRA Accounts

Standard limit: $7,000
Catch-up (50+): +$1,000
Max (age 50+): $8,000

Roth IRA income limits: $161,000 single, $240,000 married filing jointly

Frequently Asked Questions

What's the difference between 401(k) and IRA? ▼

A 401(k) is employer-sponsored with higher limits ($23,500 in 2025) and potential employer matching. An IRA is an individual account with lower limits ($7,000 in 2025) but more investment flexibility. Both come in Traditional and Roth varieties. The main advantage of 401(k) is the employer match—free money you can't get elsewhere.

Should I always max out my 401(k) before contributing to an IRA? ▼

Not necessarily. The optimal order is: (1) 401(k) up to the employer match, (2) Max Roth IRA for flexibility and investment choice, (3) Then max 401(k). This captures the free money from matching while getting the benefits of Roth tax-free growth. However, if your 401(k) has excellent low-cost funds, maxing it first can also work well.

Can high earners contribute to a Roth IRA? ▼

Direct Roth IRA contributions phase out at $161,000 (single) and $240,000 (married) in 2025. However, high earners can use the "backdoor Roth" strategy: contribute to a Traditional IRA (no income limits) and immediately convert to Roth. Alternatively, many 401(k) plans now offer a Roth 401(k) option with no income limits.

What happens if I withdraw early from these accounts? ▼

Early withdrawals (before age 59½) generally face income taxes plus a 10% penalty. Roth IRA contributions (not earnings) can be withdrawn anytime tax and penalty-free. Some exceptions exist for first-time home purchase, disability, and education expenses. 401(k)s may offer loans against your balance in some plans.

What if I change jobs—what happens to my 401(k)? ▼

You have several options: (1) Leave it with your former employer (if allowed), (2) Roll it over to your new employer's 401(k), (3) Roll it over to an IRA for more investment control, or (4) Cash it out (not recommended— taxes and penalties apply). Rolling to an IRA often provides the most flexibility and investment choices.

What is tax diversification and why does it matter? ▼

Tax diversification means having retirement savings in different account types: Traditional (taxed on withdrawal), Roth (tax-free), and taxable accounts. This gives you flexibility to manage taxable income in retirement and adapt to future tax law changes. It's like not putting all your eggs in one basket—but for taxes.

How much should I save for retirement? ▼

Most financial experts recommend saving 15-20% of your gross income for retirement, including employer matching. At minimum, save enough to get your full employer match. If you start early (20s), even 10-15% can lead to a comfortable retirement. Starting later requires higher savings rates to catch up. Use our calculator to see specific projections.

Related Retirement Tools

Explore other calculators to plan your retirement and financial future

Retirement Planner

Calculate how much you need to save for retirement and if you're on track

Roth Conversion Calculator

Analyze if converting Traditional to Roth makes sense for your situation

Withdrawal Strategy

Plan sustainable retirement withdrawals to make your money last