401(k) vs. Roth IRA: what to fund first
Employer match, then Roth, then more 401(k). Usually.
5 min read · Updated 2026-07-04
Step 1 — grab the match
If your employer offers a 401(k) match, contribute at least enough to get the full match. This is a 50–100% instant return on your money and there is no instrument in retail investing that beats it.
Step 2 — fund the Roth IRA
A Roth IRA is funded with after-tax money, grows tax-free, and comes out tax-free in retirement. For most workers who are not in the top tax bracket, Roth is more valuable than an equivalent traditional contribution because tax rates are historically low today.
Step 3 — go back to the 401(k)
After the Roth is maxed, come back to the 401(k) and push toward the annual limit if you can. Fund choice inside the 401(k) usually matters more than people think — pick the lowest-cost broad index or target-date fund available.
Key takeaways
- Match first, Roth second, more 401(k) third.
- Roth beats traditional for most middle-income workers today.
- Inside the account, pick the cheapest broad index or target-date fund.
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Educational content only. Not individualized financial, tax, or legal advice.