401k or Roth IRA

Brief Synopsis: Married & Household income of $145,000; Age = mid 30's; 2 kids under 5; 14 years remaining on mortgage

These are the 2 options:

1) Max out my 401k contribution ($17,500 pre tax)
2) Max out a Roth IRA for my wife ($5,500 post tax) and for myself ($5,500 post tax)

If I choose option #2, I will still contribute 4% of my salary ($4,040) to earn the 4% of my company's match. Also, wife contributes 8% of her salary to fund her pension that will end up paying her about 70% of her highest salary when she retires.

I wish I could do both 1 & 2, but at this moment, can only choose 1, so which should I do?