401(k) vs Traditional IRA

Traditional 401(k) vs Traditional IRA — Which First?

Most workers should max the 401(k) match first, then look at the Traditional IRA only if income allows the deduction.

Verdict

Get the 401(k) match first (free money). After the match, evaluate fund quality. If your 401(k) has high-fee funds, max the IRA next. If 401(k) is low-cost (target-date or index), stay in it up to $23K.

Side-by-side comparison

 Traditional 401(k)Traditional IRA
2026 limit$23,000$7,000
Employer matchOften yesNever
Income cap for deductionNonePhased out >$87K (single, with workplace plan)
Investment choicesLimited to plan menuAlmost anything
LoansYesNo
Best forMatch capture, simple planHigh fund quality, complex investing

Who should pick Traditional 401(k)

Anyone with employer match. Workers who want a 401(k) loan option. Anyone with simple investing needs.

Who should pick Traditional IRA

Workers without an employer match. Investors wanting access to specific ETFs/REITs not in their 401(k). Anyone whose 401(k) menu has fees over 0.50%.

Related tools

401(k) vs Roth IRACompare account types.401(k) CalculatorSee match value.Federal Tax CalculatorCheck deduction phaseout.

Disclaimer. Comparison numbers depend on your tax bracket, state, and time horizon. Educational only — not personalized financial advice. See our Financial Disclaimer.

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