Updated strategies with 2025 contribution limits
One of the biggest questions we hear is: Should I put more into my Roth IRA or my 401(k)? The answer, like most things in finance, depends on your situation.
Here’s a quick breakdown:
Roth IRA (limit for 2025: $6,500, or $7,500 if you’re 50+).
- After-tax contributions.
- Growth and qualified withdrawals are generally tax-free.
- May be best if you expect higher tax rates in retirement.
- Income limits may restrict eligibility.
401(k) (limit for 2025: $20,000, or $23,000 if you’re 50+).
- Pre-tax contributions lower today’s taxable income (traditional) or can be made after-tax with Roth option.
- Often comes with an employer match—don’t miss out on free money. Consult your plan provider for details.
- Higher contribution limits than IRAs.
- Funds are generally locked until retirement age or specific event.
For many people, the sweet spot is both: contribute enough to your 401(k) to get the full match, then build additional savings in a Roth IRA for tax flexibility later.
Not sure which is best for your situation? Let’s talk it through.
Disclosures
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.
Investing involves risk including loss of principal. No strategy assures success or protects against loss.
Sources: IRS, Retirement Topics – 2025 Contribution Limits; Fidelity, Roth IRA vs. 401(k): Key Differences.
