401(k)Traditional IRARoth IRA
Contribution limit2019: $19,000 for those under age 50; $25,000 for those 50 or older.
2018: $18,500 for those under age 50; $24,500 for those 50 or older.
2019: $6,000; $7,000 if 50 or older.
2018: $5,500; $6,500 if 50 or older.
(Note: This is a combined contribution limit for all of your traditional and Roth IRAs.)
Key pros
  • Employer match, if offered.
  • High annual contribution limit.
  • Contributions lower taxable income in the year they are made.
  • Eligibility is not limited by income.
  • Funds in a 401(k) may be less expensive than identical fund purchased outside of 401(k).


  • Large investment selection.
  • If deductible, contributions reduce taxable income in the year they are made.

  • Large investment selection.
  • Qualified withdrawals in retirement are tax-free.
  • Contributions can be withdrawn at any time.
  • No required minimum distributions in retirement.
  • Key cons
  • No control over plan and investment costs.
  • Limited investment selection.
  • Distributions in retirement are taxed as ordinary income, unless a Roth 401(k).
  • Required minimum distributions beginning at age 70 1/2.

  • Contribution limits are lower than a 401(k).
  • Deduction phased out at higher incomes if you or your spouse are covered by a workplace retirement account.
  • Distributions in retirement are taxed as ordinary income.
  • Required minimum distributions beginning at age 70 1/2.

  • Contribution limits are lower than a 401(k).
  • No immediate tax benefit for contributing.
  • Ability to contribute is phased out at higher incomes.
  • Bottom lineFund a 401(k) first if your company offers matching dollars. Fund an IRA or Roth IRA first if your 401(k) doesn't offer a match. If you max out the IRA, begin contributions to your 401(k).