What is the maximum I can have stored in a traditional 401(k) and a Roth 401(k)?
I've never seen anything in any IRS publication that placed limits on the balance of a 401K, only on what you can contribute (and defer from taxes) each year.  The way the IRS 'gets theirs' as it were is on the taxes you have to pay (for a traditional IRA anyway) which would not be insubstantial when you start to figure out the required minimum distribution if the balance was 14Mill.. You're required to take out enough to in theory run the thing out of money by your life expectancy.. The IRS has tables for this stuff to give you the exact numbers, but for the sake of a simple example, their number for someone age 70 (single or with a spouse who is not more than 10 years younger) is 27.4..  If we round that to 28 to make the math nice, then you would be forced to withdraw and pay taxes on around $500,000 per year.  (So there would be a hefty amount of taxes to be paid out for sure). So a lot of that $500K a year going to pay taxes on your distributions, but then, considering you only contributed  660,000 pre-tax dollars in the first place, what a wonderful problem to have to deal with.  Oh don't throw me in THAT briar patch mr fox! The numbers aside (I'd not assume 12%/yr) there is no limit to the balance. There are 401(k) accounts that have great matching and profit sharing deposits putting the per year limit closer to $45k, combine that with company stock in, say, Apple which has risen 60 fold this past decade, and balances in the tens of millions are possible.
First, if it's just about the income limit, you can deposit to a regular IRA and soon after (like next day) convert it to a Roth. So long as you have no pretax IRA money out there, there will be no tax consequence, a cent on a day's interest, perhaps.  As far as the 401(k) goes, are the options any good? Some 401(k) investment choices are so awful it's best to stop after getting full matching. Mine has an S&P index fund with a .05%/yr expense ratio. That's less than I can find in the best ETF out there.  Keep in mind, if you invest long term, the dividends are favored, 15% rate, and the capital gain is both controllable (you decide when to take it, by selling) and also favored, 15%. The magic of 401(k) and IRAs, whatever kind is a bit overplayed in the media. Your investing rate and asset choices are far more important. I respectfully disagree with Eric.  If you invest from day one in a Roth, where, exactly will taxable income come from to put you in a higher bracket at retirement? I agree, maybe for other reasons than you list, that early on, post-tax is the way to go, because I'll assume that one starts work in a lower bracket. There's probably a majority who start work in the 15% bracket, but over time work their way to 25%. As they grow to 25%, using the pretax 401(k) and IRA can keep them at 15% for some number of years. In any year of low income, for whatever reason, they can convert the pretax money to Roth to top off the 15% bracket.  To bring the point home, if you went post tax the whole way, imagine retiring with $2M in the Roth, but no pretax money. You now have a standard deduction, exemption, and the full 10% bracket each and every year gone to waste. Money you paid 25% tax when you could be paying zero on some of it. The deduction and exemption add to $9750 in 2012, and the 10% rate applies to the first $8700 of taxable income. If you do the math, this is $17,500, and if you plan a 4% withdrawal rate, you'd need 437,500 pretax money to give you the 17500 each year. Last, all three factors (standard deduction, exemption, and bracket limits) all rise a bit each year. An increase of $200 is another $5000 to save pretax.  Edit - 2013 brought the ability to convert within one's 401(k) from the traditional pretax side to the Roth side. This makes possible turning 100% of one's 401(k) money to Roth, and retiring without the benefite of the standard deduction, exemptions, etc. Put in the maximum you can into the 401(k), the limit should be $16,500 so long as the highly compensated rules don't kick in. Since you cannot deduct the traditional IRA, it's a great option to deposit to a traditional IRA and immediately convert that balance to a Roth account. That puts you at $21,500/yr saved, nearly 18%.  There's nothing stopping you from investing outside these accounts. A nice ETF with low expenses, investing in a stock index (I am thinking SPY for the S&P 500) is great to accumulate long term. If ordinary income tax rates and contribution rates to tax-advantaged retirement accounts are held constant, It's net negative to the extent that the average retirement account return exceeds the risk-free rate. Rather than pushing money into Roth accounts, the government could leave traditional 401(k)s unchanged, borrow the difference in up-front tax revenue that it's foregoing by doing so, and repay that debt as the tax revenue from traditional 401(k) disbursements comes in. Net of interest on the additional debt, the latter strategy would increase the government's total tax revenue by an amount proportional to the average excess return of the affected retirement accounts, with essentially no downside (other than messaging) relative to the strategy that's being proposed.  Of course, in reality it's likely that retirement savings rates would decline as a result of the change, so that would partially offset the overall reduction in tax revenue. However, the downsides of reduced retirement savings rates arguably far outweigh that benefit. (That's why tax-advantaged retirement accounts exist in the first place.) "Close... Warning, I may be off a bit here; I'm sure someone will correct me if so. Traditional 401k or IRA: money goes in pre-tax (so, yes, you avoid paying tax on it now), grows untaxed, taxes are due when you retire and start taking money back out of the account -- but your income, including these withdrawals, is likely to be lower than your peak earning years so your tax rate will be lower. You don't avoid all the tax, but you delay it and hopefully reduce it, and by doing so there's more money in your account earning returns. Roth 401k or IRA: money goes in after taxes (you do pay income tax now). However, all returns on the money are untaxed (I believe), and you pay no tax when you're eligible to withdraw the funds.  Either or both kinds of 401k may be eligible for some percentage of matching funds from your employer (there are some incentives for them to offer this benefit). I believe that even if you're doing a Roth 401k, the matching funds legally have to go in as traditional plan. And yes, as that implies, it is possible to split your contribution between the two styles. Note: the matching funds are ""free money."" If your plan offers a match, it is highly recommended that you contribute enough to your 401k to capture the maximum match." I routinely max out my 401k contributions.  The company's stupid website actually forces me to make two contributions -- one for the regular contribution, and another for the Catchup Contribution. I routinely adjust my 401k contribution throughout the year -- at the first of the year, I calculate how much to withhold such that I can adjust withholding to 6% of salary more than before, once I hit the SS tax limit.  At the first of the year, I ignore bonuses.  I re-adjust (if needed) once I know bonuses. I've worked for my company for almost 30 years now. "The error in the example is here: ""Now, if you contribute 5% to a Roth 401(k), your employer would match your after-tax 5% contribution. If the tax rate is 25%, that would be 5% of $60,000, which is $3,000. However, that $3,000 is put in to a traditional 401(k), so it is taxed when withdrawn. Assuming the tax rate is still 25% when you withdraw, you are only getting $2,250. Essentially you are giving up $750 of free money in this case."" You set your contribution to Roth 401k as a function of the gross, 80,000.  You choose 5% and contribute 4000 Your employer matches 4000. At the end of the year, your taxable income to the IRS is 80000, and you pay 30% or 24000.  You have 80K-4K-24K to live on, or 52K If you chose the alternate regular 401k,then you contribute 4K, your income to the IRS is (80-4=) 76k, and you pay 30%, 22.8K in tax.  You have 80-4-22.8 or 53.2K to live on. Or, to come at it the other way, you have 4000*30% =1200 extra tax reduction in your income this year.   If the extra income in 401k versus extra current year tax in Roth IRA means you have to reduce less, like 2800K to the roth so you maintain a 53.2K lifestyle, then yes, the Roth IRA match is reduced.  If you have the cash flow to prepay the current year tax and maximum-match contribution, you will get the full match based on your gross income." I think this article explains it pretty well: Contributions to a SEP are limited to   20% of your business  income (which is   business income minus half of your   self-employment tax), up to a maximum   of $45,000. With a solo 401(k), on the   other hand, you can contribute up to   $15,500 plus 20% of your business   income (defined the same way as   above), with a maximum contribution of   $45,000 in 2007. You can make an extra   $5,000 catch-up contribution if you're   50 or older