With 2026 contribution limits now in effect, this is the right time to review whether your retirement savings are in the most advantageous account structure. The IRA versus 401(k) decision has meaningful implications for your long-term tax bill and investment flexibility.
The 401(k) Advantage
If your employer offers a 401(k) match, contribute at least enough to capture the full match before anything else. This is an immediate 50% to 100% return on your contribution — nothing in the market reliably beats it. The 2026 contribution limit for 401(k) plans is $23,500 for those under 50, with a $7,500 catch-up contribution for those 50 and older.
When the IRA Wins
IRAs — both traditional and Roth — offer investment flexibility that most 401(k) plans cannot match. You are not limited to a curated menu of mutual funds. A self-directed IRA can hold individual stocks, ETFs, real estate, and with proper structure, alternative investments. For sophisticated investors, this flexibility is enormously valuable.
The Roth Conversion Opportunity
With tax rates potentially rising in coming years, converting traditional IRA assets to Roth — paying taxes now to eliminate taxes on decades of future growth — is worth serious consideration for many clients. The math often favors conversion for investors with 15 or more years to retirement.
Our Recommendation
Maximize the 401(k) match first. Then fund a Roth IRA. Then return to the 401(k) if contribution room remains. And always work with a CPA who understands the interaction between investment returns and tax strategy.
Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute investment, financial, or legal advice. Past performance is not necessarily indicative of future results. Investing involves risk, including the possible loss of principal. Wallace Investments is an SEC-Registered Investment Advisor. Please consult with a qualified financial advisor before making any investment decisions. © 2026 Wallace Investments.