Roth IRA vs Roth 401(k) — 5 Differences That Cost People Money

Get the FREE BEGINNER'S GUIDE to self-directing an IRA and learn how to put your Roth dollars into real estate, private funds, startups, and crypto! Ready to build your tax-free bucket the right way — BOOK A FREE CALL with DirectedIRA and get the Roth IRA or Roth 401(k) accounts you need set up today! Roth IRAs and Roth 401(k)s share a first name and the same tax-free growth, but almost every rule that governs them is different — and picking the wrong one for your next dollar can cost you real money. Wealth lawyer and real estate investor Mat Sorensen breaks down the five biggest differences between these accounts and the funding order that lets you capture the best of both. What the five differences reveal: • Why high-income earners are phased out of Roth IRA contributions at $153,000 single or $242,000 married filing joint • How the Roth 401(k) allows $24,500 in 2026 versus $7,500 in a Roth IRA, plus catch-up and super catch-up amounts • Why an employer match can double your contribution on day one and should always be captured first • How Roth IRA contributions can come out any time tax- and penalty-free while Roth 401(k) dollars stay locked until 59½ • When a 401(k) participant loan of half the balance up to $50,000 becomes your early access option • Why Roth 401(k) dollars can roll into a Roth IRA but Roth IRA dollars can never move back • The three-step funding order that gets the match, the flexibility, and the maximum Roth contribution The bigger lesson is that these two accounts are teammates rather than rivals. One delivers a larger contribution limit and free employer money, while the other delivers investment freedom, early access to contributions, and control over where your tax-free dollars actually grow. The investors building the largest tax-free buckets are not the ones who picked a side — they are the ones who used both in the right sequence. This strategy is especially valuable for high-income earners, employees with a 401(k) match, self-employed investors using a solo 401(k), younger savers who may need early access, and anyone approaching retirement who wants to start their Roth IRA five-year clock now! Check out my youtube channel for more content on retirement planning and self-directed IRA topics!: https://www.youtube.com/@MatSorensen For questions or to learn more about this episode's topic, book a call with an IRA specialist here: https://directedira.com/appointment/ Interested in learning more about alternative investments? Join us this year at the Alternative Asset Summit October 22 & 23, where you'll hear from industry experts and connect with like-minded investors exploring new ways to build wealth: https://altassetsummit.com/ Other: Mat Sorensen: https://matsorensen.com Mark J. Kohler: https://markjkohler.com/  KKOS Lawyers: https://kkoslawyers.com Main Street Business https://mainstreetbusiness.com