{"slug":"401k-vs-ira","question":"401(k) vs IRA","answer":"A 401(k) is an employer-sponsored retirement plan with higher contribution limits ($23,500 in 2024) and potential employer matching, while an IRA is an individual retirement account with lower limits ($7,000 in 2024) but greater investment flexibility and no employer required.","answer_curated":true,"verdict":"Choose a 401(k) if your employer offers matching contributions—the free money is difficult to pass up, and the higher contribution limits accelerate retirement savings for higher earners. Choose an IRA if you're self-employed, prefer complete investment control, want early access to funds, or need flexibility across multiple investment accounts.","keyDifferences":[{"label":"Annual Contribution Limit","winner":"a","entityAValue":"$23,500","entityBValue":"$7,000"},{"label":"Employer Match Available","winner":"a","entityAValue":"Yes, commonly 3-6% match","entityBValue":"No employer match"},{"label":"Investment Options","winner":"b","entityAValue":"Limited (20-50 funds typically)","entityBValue":"Unlimited (stocks, bonds, ETFs, mutual funds)"},{"label":"Required Minimum Distributions (RMDs)","winner":"tie","entityAValue":"Age 73 (SECURE 2.0)","entityBValue":"Age 73 (SECURE 2.0)"},{"label":"Withdrawal Penalty Age","winner":"tie","entityAValue":"59.5 years old (10% penalty before)","entityBValue":"59.5 years old (10% penalty before)"}],"winner":{"slug":"401-k-plan","name":"401(k) Plan"},"confidence":"high","entities":[{"name":"401(k) Plan","slug":"401-k-plan","url":"https://www.aversusb.net/entity/401-k-plan","alternativesUrl":"https://www.aversusb.net/api/v1/alternatives/401-k-plan"},{"name":"Individual Retirement Account (IRA)","slug":"individual-retirement-account-ira","url":"https://www.aversusb.net/entity/individual-retirement-account-ira","alternativesUrl":"https://www.aversusb.net/api/v1/alternatives/individual-retirement-account-ira"}],"faqs":[{"question":"Should I max out my 401(k) or IRA first?","answer":"Prioritize getting your full employer 401(k) match first (typically 3-6% of salary)—this is immediate guaranteed return. Then max out your IRA ($7,000 in 2024) for flexibility and investment control. Finally, contribute remaining savings back to your 401(k) up to $23,500 limit if cash flow allows."},{"question":"Can I have both a 401(k) and an IRA at the same time?","answer":"Yes, you can have both simultaneously. You can contribute the maximum to each account ($23,500 to 401(k) + $7,000 to traditional/Roth IRA in 2024). However, if you earn above certain thresholds and have a 401(k), your ability to deduct traditional IRA contributions is reduced (income limits range $77,000-$87,000 for single filers in 2024)."},{"question":"What happens to my 401(k) if I change jobs?","answer":"You have four options: (1) Leave it with your former employer, (2) Roll it to your new employer's 401(k) if available, (3) Roll it to a traditional IRA (recommended for fee control and investment options), or (4) Take a distribution (subject to 20% withholding and 10% early withdrawal penalty if under 59.5). Most financial advisors recommend rolling to an IRA for lower fees and more control."}],"attribution":{"source":"A Versus B","url":"https://www.aversusb.net/compare/401k-vs-ira","license":"CC BY 4.0","citationFormat":"According to A Versus B (https://www.aversusb.net/compare/401k-vs-ira), A 401(k) is an employer-sponsored retirement plan with higher contribution limits ($23,500 in 2024) and potential employer matching, while an IRA is an individual retirement account with lower limits ","dateModified":"2026-07-06T06:01:49.207Z"},"relatedQuestionsUrl":"https://www.aversusb.net/api/faq/401k-vs-ira","relatedComparisonsUrl":"https://www.aversusb.net/api/v1/related/401k-vs-ira","knowledgeGraphUrl":"https://www.aversusb.net/api/knowledge-graph/401k-vs-ira","claimReviewSchema":{"@context":"https://schema.org","@type":"ClaimReview","@id":"https://www.aversusb.net/compare/401k-vs-ira#claimreview","url":"https://www.aversusb.net/compare/401k-vs-ira","inLanguage":"en-US","isAccessibleForFree":true,"conditionsOfAccess":"Free","claimReviewed":"401(k) vs IRA","reviewBody":"A 401(k) is an employer-sponsored retirement plan with higher contribution limits ($23,500 in 2024) and potential employer matching, while an IRA is an individual retirement account with lower limits ($7,000 in 2024) but greater investment flexibility and no employer required.","datePublished":"2026-03-31T21:40:17.439Z","dateModified":"2026-07-06T06:01:49.207Z","reviewRating":{"@type":"Rating","ratingValue":5,"worstRating":1,"bestRating":5,"alternateName":"High Confidence"},"author":{"@type":"Organization","@id":"https://www.aversusb.net/#organization","name":"A Versus B","url":"https://www.aversusb.net"},"itemReviewed":{"@type":"WebPage","@id":"https://www.aversusb.net/compare/401k-vs-ira","url":"https://www.aversusb.net/compare/401k-vs-ira","name":"401(k) vs IRA","inLanguage":"en-US"}}}