{"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 income restrictions for traditional contributions.","answer_curated":true,"verdict":"Choose a 401(k) if you want to maximize retirement savings with employer matching and need access to loans—it's ideal for employees seeking free money through matching contributions. Choose an IRA if you're self-employed, want complete control over investments, or need flexibility without income restrictions—it suits those who want diverse asset classes beyond mutual funds.","keyDifferences":[{"label":"Annual Contribution Limit","winner":"a","entityAValue":"$23,500","entityBValue":"$7,000"},{"label":"Employer Matching Available","winner":"a","entityAValue":"Yes (typical 3-6%)","entityBValue":"No"},{"label":"Investment Options","winner":"b","entityAValue":"Limited to plan offerings (typically 20-40 funds)","entityBValue":"Unlimited (stocks, bonds, ETFs, real estate, etc.)"},{"label":"Required Minimum Distributions (RMD)","winner":"tie","entityAValue":"Starts age 73 (SECURE 2.0)","entityBValue":"Starts age 73 (SECURE 2.0)"},{"label":"Loan Borrowing Option","winner":"a","entityAValue":"Yes (up to $69,000 or 50% of balance)","entityBValue":"No (prohibited with limited exceptions)"}],"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":"Can I have both a 401(k) and IRA?","answer":"Yes. You can contribute to both simultaneously, though there are income limits for deducting traditional IRA contributions if you have a 401(k). In 2024, a single filer earning over $77,000 with a 401(k) cannot deduct traditional IRA contributions, but Roth IRA contributions remain subject to separate income limits ($161,000-$176,000). You can legally maximize both if within limits."},{"question":"What happens to my 401(k) if I leave my job?","answer":"You have four options: (1) Roll it into an IRA for better investment control, (2) Roll it into your new employer's 401(k), (3) Keep it with your former employer (if balance exceeds $5,000), or (4) Cash it out (triggering 10% penalty and income taxes if under 59½). Most financial advisors recommend rolling to an IRA to access lower fees and more investment options."},{"question":"Which account should I fund first?","answer":"Prioritize your 401(k) up to the employer match (free money—typically 3-6% of salary), then max an IRA if eligible ($7,000 in 2024), then return to 401(k) for remaining contribution room ($23,500 total). This sequence captures free money first, then leverages IRA's lower fees and flexibility, then uses higher 401(k) limits."}],"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":"2026-07-06T21:24:17.406Z"},"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 income restrictions for traditional contributions.","datePublished":"2026-07-06T21:24:16.834Z","dateModified":"2026-07-06T21:24:17.406Z","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"}}}