What Are The Similarities Between 401K And Roth IRA? 
Both have annual contribution limits : 401k = $ 18,000 / year including employer match , Roth = $ 5,500 / year Both have catch up provisions if you are over 50 years of age 401 -LRB- k -RRB- is tax deferred but a Roth is with after tax contributions , grows tax free and distributions are tax free . Roths have income limits as well : If married filing jointly and make over $ 181,001 annual income , ineligible for Roth . Single - Annual income greater than $ 120,000 , ineligible for Roth . Neither of them have any guarantee of returns and no protection for principle . Can not access the funds without paying 10 % penalty and pay ordinary income tax on growth/contributions . The alternative to a Roth is cash value whole life insurance - unlimited contributions and guaranteed growth with principle protection - plus asset protection and liquidity . 