Roth, 401(k) or IRA First? The Order Matters More Than the Account

On an illustrative $70,000 salary, funding retirement accounts in the right order is worth $2,954 in year one — $2,100 of employer match, plus $854 of federal tax deferred if the pre-tax deferral beats the Roth for you. That is before any investment earns a dollar. The accounts are identical either way; only the sequence changes.

Six percent of $70,000 is $4,200, and the match hands back $2,100

Take an illustrative single filer earning $70,000. The plan offers an illustrative match of 50% on the first 6% of pay. Six percent of $70,000 is $4,200. Contribute exactly that, and the employer credits $2,100.

That is a 50% return on the dollar, and it lands the moment payroll clears. No market return is guaranteed the way that one is. Every dollar you send elsewhere before hitting $4,200 leaves fifty cents behind.

So the first step is not a choice between account types. It is a percentage-of-pay target set by the plan document, and it comes before any Roth argument.

At $53,900 of taxable income, the first $3,500 you defer comes off at 22%

Now the wrapper question. The 2026 standard deduction for a single filer is $16,100, so $70,000 of wages leaves $53,900 of taxable income. For single filers the 22% bracket begins at $50,400.

Deferring that $4,200 pre-tax pulls taxable income to $49,700. The first $3,500 of the deferral is peeled off at 22%, worth $770. The last $700 falls in the 12% band, worth $84. Federal tax drops $854.

Send the same $4,200 to a Roth 401(k) instead. It goes in with after-tax dollars, so you pay that $854 now. A qualified distribution later is not taxed, while every dollar leaving the pre-tax account is.

Which trade wins depends on the rate you face then against the rate you pay today. As the companion piece argues, the break-even is a tax rate, not an age.

After the match, $20,300 of 401(k) room and $7,500 of IRA room are still open

2026 retirement limit	Amount
401(k)/403(b)/457/TSP employee deferral	$24,500
Catch-up, age 50 and over	$8,000
Catch-up, turning 60-63 in 2026	$11,250
IRA, traditional and Roth combined	$7,500
IRA catch-up, age 50 and over	$1,100
Employee plus employer, all sources	$72,000

Source: IRS Notice 2025-67, published November 13, 2025. Amounts apply to tax year 2026.

The catch-up lines matter once you pass 50. If your plan allows catch-up contributions, an extra $8,000 rides on top of the $24,500, and $11,250 for those turning 60 through 63 during 2026. There is a string attached: if your 2025 FICA wages from the employer sponsoring the plan topped $150,000, your 2026 catch-up in that plan has to go in as Roth.

The 2026 employee deferral limit is $24,500. The $4,200 that captured the match uses about 17% of it, leaving $20,300 inside the plan. An IRA is a separate bucket: $7,500 across traditional and Roth combined.

At $70,000, this filer sits far below the $153,000 where the Roth IRA phase-out starts for single filers. It is also below $81,000, where the traditional IRA deduction starts phasing out for a worker covered by a plan. Both doors stay open.

The $72,000 combined ceiling binds only high earners with generous profit sharing. Here, $4,200 of deferral plus $2,100 of match totals $6,300. The saver’s credit is a different story. It allows nothing above $40,250 of AGI for a single filer, and this filer’s AGI of $65,800 sits well past that. No credit here.

Your own paycheck runs through the same three subtractions

Find the match formula in your plan documents, then contribute the percentage that maxes it. That figure is a share of pay, not a dollar amount someone repeated to you.

Then subtract your standard deduction from your gross pay. See how far the result sits above your nearest bracket line. That slice above the line is what a pre-tax deferral shelters at the higher rate. Everything under the line saves at the lower one, which is where the Roth case gets interesting.

Only after those two steps does the limit question matter. In this example $20,300 and $7,500 are still available. A filer contributing $4,200 is nowhere near running out of room.

The salary, the filing status and the 50% match on the first 6% of pay are illustrative. Your plan’s own match formula and vesting schedule decide whether that $2,100 is yours and when. Filing status moves both the standard deduction and every bracket line above it. State income tax, left out of this arithmetic entirely, changes what a pre-tax dollar is worth.

Every figure here runs on one illustrative $70,000 salary and one plan’s match formula, and a reader’s own plan document sets the match, its cap and its vesting, while filing status and state tax decide what a deferral is worth at the margin.