Big Law 401(k) Guide: Traditional vs. Roth, Employer Match, and the Equity Partner Transition (2026)

A first-year associate at a Cravath-scale firm makes $225,000. After federal tax at 35%, New York state tax, and NYC city tax, roughly 48 cents of every dollar she earns above the 32% bracket threshold goes to taxes. Her decision of whether to make her 401(k) contributions pre-tax or Roth — a default checkbox most people click past — is worth roughly $8,500 in real money in year one alone. Most Big Law associates get this decision wrong, and the error compounds for years.

2026 contribution limits at a glance

Before the decision framework, the numbers:¹

The gap between the $24,500 employee deferral and the $72,000 combined cap is filled by employer contributions — match, profit-sharing, or both — plus any after-tax contributions you make (relevant for the mega backdoor Roth strategy discussed below).

Traditional vs. Roth 401(k): the Big Law answer

Unlike a Roth IRA, there is no income limit for Roth 401(k) contributions. A seventh-year associate making $435,000 can make Roth 401(k) contributions without restriction. The question isn't eligibility — it's whether Roth or traditional is actually better at your income level.

The math is straightforward: traditional is better when your current marginal tax rate exceeds your expected marginal rate on withdrawals in retirement. Roth is better when the reverse is true.

For the vast majority of Big Law associates — particularly those in New York or California — the math clearly favors traditional (pre-tax) contributions. You're deferring income taxed at 46–50% today and paying taxes at a lower rate in retirement. The tax savings compound for decades inside the account.

The case for Roth 401(k) in Big Law is narrow:

• You're a first- or second-year associate who genuinely expects to leave for a nonprofit, government role, or lower-paying career path (making PSLF and a permanently lower bracket plausible)
• You're in a no-income-tax state, your combined marginal rate is already close to your expected retirement rate, and you want the flexibility of no RMDs
• You have unusually high confidence in substantially higher future tax rates (a macro bet)

The SECURE 2.0 Act eliminated required minimum distributions (RMDs) on Roth 401(k) and Roth TSP accounts starting in 2024² — removing a prior advantage of rolling to a Roth IRA before retirement. This makes Roth 401(k) more attractive on the margin, but doesn't change the core math at 37%+ combined marginal rates.

One practical note: if you can't decide, some plans allow you to split — a portion traditional, a portion Roth — as long as combined contributions don't exceed $24,500. This isn't optimal either way, but it's better than overthinking and contributing nothing.

Employer match at law firms: what to actually expect

Law firm 401(k) match structures vary widely. AmLaw 200 firms generally offer one of these approaches:

• Safe harbor match: 100% match on first 3% of compensation, 50% match on next 2% — totaling a 4% match if you contribute 5%. Common at firms that want to avoid ADP/ACP nondiscrimination testing.
• Discretionary profit-sharing: No guaranteed match; the firm contributes a flat dollar amount or percentage of compensation at year-end if the year was profitable. Can be substantial at AmLaw 100 firms in strong years — often $20,000–$40,000+ for senior associates.
• Combination: A modest guaranteed match plus discretionary profit-sharing on top.
• No match or minimal match: Some large firm plans contribute nothing guaranteed, relying entirely on the high associate salaries to attract talent without retirement-plan sweeteners.

The practical implication: always contribute at least enough to capture any guaranteed match — that's an instant 50–100% return on your contribution. Beyond that, max out your $24,500 deferral regardless of the match, because the tax savings from traditional pre-tax contributions at a 35–37% marginal rate are valuable on their own.

Profit-sharing and the §415(c) ceiling

Firm profit-sharing contributions count toward your $72,000 combined §415(c) limit for the year — they are not in addition to it. This matters in years when your firm makes a large discretionary contribution:

In an exceptional year where the firm's profit-sharing contribution is large enough to push close to the $72,000 cap, your ability to make after-tax contributions shrinks. The plan administrator tracks this — you won't accidentally over-contribute, but you should understand why the space for additional contributions may vary year to year.

Mega backdoor Roth: if your firm's plan allows it

The mega backdoor Roth is one of the highest-leverage tax strategies available to high-income earners whose employer plan supports it. Here's how it works:

1. After maxing your $24,500 pre-tax deferral, you make after-tax (non-Roth) contributions up to the remaining §415(c) room. If the firm contributed $10,000 in profit-sharing, you have $72,000 − $24,500 − $10,000 = $37,500 of remaining room for after-tax contributions.
2. You then elect an in-service distribution of those after-tax contributions to a Roth IRA (or in-plan Roth conversion, if the plan allows it). The after-tax contributions themselves convert tax-free; any earnings that accrued between contribution and conversion are taxable.
3. The result: you've effectively gotten an additional $37,500 (or whatever the room was) into a Roth account, far beyond the $7,500 annual Roth IRA limit.

The catch: many law firm 401(k) plans do not permit after-tax contributions or in-service distributions. Check with your firm's HR or benefits department. Ask specifically: "Does the plan allow after-tax, non-Roth contributions?" and "Does it allow in-service Roth conversions or in-service distributions of after-tax contributions?" If both answers are yes, the mega backdoor Roth is available to you.

For associates at AmLaw 200 firms who have already maxed the backdoor Roth IRA ($7,500), HSA ($4,400 if you're on an HDHP), and pre-tax 401(k) deferral ($24,500), the mega backdoor Roth can shelter an additional $30,000–$47,000 annually in tax-advantaged growth. Over a 7-year associate tenure, that compounds to a meaningful Roth balance before you've even dealt with partnership questions.

When you make equity partner: the 401(k) changes

This is the one that catches partners off guard. When you become an equity partner in a law firm organized as an LLP or partnership, you are legally a partner, not an employee. The tax law treats you as self-employed for retirement plan purposes — and your firm's 401(k) plan may follow suit.

What this means in practice depends on how your firm's plan is drafted:

Scenario 1: The firm plan excludes equity partners

Many law firm 401(k) plans are drafted to cover "employees" — which by ERISA definition can exclude partners. If this is your firm, you lose access to the firm's 401(k) on partnership day. You'll need your own retirement plan:

• Solo 401(k) / Individual 401(k): If you're a sole proprietor or work through your own professional corporation (PC) with no common-law employees other than a spouse, you can sponsor your own 401(k). The contribution mechanics are the same — $24,500 employee deferral (plus catch-up) + up to 20–25% of net self-employment income as "employer" profit-sharing, capped at $72,000 combined. You can also allow after-tax contributions for a mega backdoor Roth in your solo plan.
• SEP-IRA: Simpler to administer; contributions can be up to 25% of net SE income, capped at $72,000. No Roth component, no catch-up, but also no plan administration requirements. Works well for partners who want maximum simplicity.
• Defined benefit / cash balance plan: For partners 42+, the most aggressive tax shelter. See the cash balance plan guide for contribution ranges by age.

Scenario 2: The firm plan covers partners

Some law firms — particularly those that have amended their plan documents carefully, or those that have both LLP partners and employee-staff — do allow equity partners to participate in the firm 401(k). If this is your firm, your contribution mechanics may stay similar, though how employer contributions are structured for partners (versus employees) can differ. Ask your firm's CFO or HR whether equity partners participate in the 401(k), and on what terms, before relying on it for retirement planning.

The transition year

The year you make equity partner is a high-stakes tax year with a mid-year change in your compensation structure. You'll typically receive W-2 income from the firm for the months you were an associate, then K-1 income for the partnership months. Your 401(k) contributions as an associate are limited by the W-2 period. If you're excluded from the plan at partnership, you'll need to establish your own plan (Solo 401(k) must be adopted by December 31 of the tax year to take contributions for that year). The pre-partnership checklist covers the timing decisions in detail.

The full tax-shelter stack for Big Law attorneys

The 401(k) is the foundation, but it's not the whole picture. Here's the priority order for a Big Law associate at typical income levels, from highest marginal benefit to lowest:

1. 401(k) to at least the employer match threshold — free money; always capture first.
2. HSA if you're enrolled in a qualifying HDHP — $4,400 individual / $8,750 family in 2026.³ Triple tax advantage (deductible, grows tax-free, tax-free for medical). Invest it; don't spend it until retirement. For Big Law associates, the HDHP vs. PPO analysis requires looking at your actual medical usage — young healthy attorneys who rarely use benefits often come out ahead on the HDHP with the HSA benefit.
3. 401(k) deferral max ($24,500) — pre-tax almost always better at 35–37%+.
4. Backdoor Roth IRA ($7,500) — every Big Law attorney earns above the $168K Roth IRA income limit. The backdoor strategy (nondeductible traditional IRA → immediate Roth conversion) gets you $7,500/year into tax-free growth. See the backdoor Roth IRA guide.
5. Mega backdoor Roth (if plan allows) — additional $30K–$47K/year of Roth contributions via after-tax 401(k). High value, but contingent on your plan supporting it.
6. Cash balance plan (equity partners age 42+) — when you're a partner and have the structure to support one. The cash balance plan guide covers contribution ranges up to $290,000/year.
7. Partnership capital reserve (associates) — not a tax-advantaged account, but building toward the $400K–$800K you'll need for the buy-in. Taxable brokerage or high-yield savings, optimized for after-tax growth with tax-loss harvesting.
8. Taxable brokerage — after all tax-advantaged space is filled. Asset location matters: put tax-inefficient assets (bonds, REITs) in the 401(k); hold long-term equity in taxable for LTCG treatment.

For associates on the partnership track, there's a real tension between maximizing retirement contributions and accumulating the capital reserve for the buy-in. A 5th-year associate saving aggressively for both is doing the right thing — the retirement contributions get you tax arbitrage today and compound long-term, while the capital reserve is a near-term obligation. Don't sacrifice the 401(k) max to build the capital reserve faster; the tax savings from the 401(k) are too large to give up. See the Big Law savings rate guide for year-by-year allocation targets.

NQDC vs. 401(k): which deserves the next dollar?

Equity partners who have both a 401(k) (or solo 401(k)) and a firm NQDC plan face an allocation decision. The key differences:

• ERISA protection: 401(k) assets are your property, held in trust, protected from the firm's creditors. NQDC assets are an unsecured promise from the firm — if the firm goes bankrupt or merges unfavorably, you may lose those funds. For AmLaw 100 firms this is a remote risk; for smaller or financially stressed firms it's real.
• Distribution flexibility: 401(k) distributions are largely at your discretion after 59½ (with RMDs at 73/75). NQDC distributions are locked to your §409A elections made at least 12 months before the distribution year — you cannot accelerate them once set.
• Investment options: 401(k) offers whatever your plan's menu includes. NQDC often offers a broader range of hypothetical investment benchmarks but is still a notional account.
• Tax treatment: Identical — both defer income until distribution, then taxed as ordinary income.

In general: fill the 401(k) before the NQDC for the ERISA protection and distribution flexibility. Use NQDC for additional deferral once the 401(k) is maxed, particularly if you're deferring income you expect to be distributed in lower-income retirement years. For the NQDC optimizer analysis, use the NQDC deferral optimizer tool.