{"id":"cmr9q9tvi0041uynoi1kj1428","slug":"401k-vs-ira)","title":"401(k) vs IRA","shortAnswer":"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.","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)"},{"label":"Income Limits for Contributions","winner":"a","entityAValue":"None","entityBValue":"Yes ($161,000-$176,000 Roth IRA, 2024)"},{"label":"Early Withdrawal Penalty","winner":"tie","entityAValue":"10% penalty plus taxes before 59½ (with exceptions)","entityBValue":"10% penalty plus taxes before 59½ (with exceptions)"}],"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.","category":"finance","entities":[{"id":"cmr8tbiv8001n10nazruqgds3","slug":"401-k-plan","name":"401(k) Plan","shortDesc":"Employer-sponsored defined contribution retirement plan with tax advantages and matching benefits.","imageUrl":null,"entityType":"product","position":0,"pros":["Employer matching contributions (average 3-6% of salary—free money)","High annual contribution limit ($23,500 in 2024, $31,000 with catch-up at 50+)","Loans available up to $69,000 or 50% of vested balance","No income restrictions regardless of earnings level","Automatic payroll deductions simplify saving"],"cons":["Limited investment options restricted to employer-selected funds","Higher fees (average 0.50-1.00% annually) compared to IRAs","Less portable if changing jobs frequently"],"bestFor":"Full-time employees seeking to maximize retirement savings with employer matching and those with higher incomes who exceed IRA limits."},{"id":"cmr8tbivc001p10naffp0q352","slug":"individual-retirement-account-ira","name":"Individual Retirement Account (IRA)","shortDesc":"Self-directed retirement account offering complete investment flexibility and tax-advantaged savings.","imageUrl":null,"entityType":"product","position":1,"pros":["Unlimited investment options (stocks, bonds, ETFs, REITs, mutual funds, alternatives)","Lower fees (average 0.10-0.30% annually for discount brokers)","Complete portability—move between providers easily","No employer requirement—available to self-employed and gig workers","Roth IRA option allows tax-free growth and withdrawals in retirement"],"cons":["Lower annual contribution limit ($7,000 in 2024, $8,000 with catch-up at 50+)","Roth IRA income limits ($161,000-$176,000 MAGI in 2024 for single filers)","Cannot borrow against account balance"],"bestFor":"Self-employed individuals, gig workers, high-income earners, and those wanting granular control over investment selection and diversification."}],"attributes":[{"id":"cmr8tbivw001w10naf6yxftbv","slug":"2024-annual-contribution-limit","name":"2024 Annual Contribution Limit","unit":"USD","category":"Contribution Limits","dataType":"number","higherIsBetter":true,"values":[{"entityId":"cmr8tbiv8001n10nazruqgds3","valueText":"$23,500","valueNumber":23500,"valueBoolean":null,"winner":true},{"entityId":"cmr8tbivc001p10naffp0q352","valueText":"$7,000","valueNumber":7000,"valueBoolean":null,"winner":false}]},{"id":"cmql8nt1k000l524cjrmnczka","slug":"catch-up-contribution-age-50-","name":"Catch-Up Contribution (Age 50+)","unit":"USD","category":"Contribution Rules","dataType":"number","higherIsBetter":true,"values":[{"entityId":"cmr8tbiv8001n10nazruqgds3","valueText":"$7,500 additional","valueNumber":7500,"valueBoolean":null,"winner":true},{"entityId":"cmr8tbivc001p10naffp0q352","valueText":"$1,000 additional","valueNumber":1000,"valueBoolean":null,"winner":false}]},{"id":"cmr9q9twd0047uynotfor2hye","slug":"annual-contribution-limit-2024-","name":"Annual Contribution Limit (2024)","unit":"USD","category":"Contribution Rules","dataType":"number","higherIsBetter":true,"values":[{"entityId":"cmr8tbiv8001n10nazruqgds3","valueText":"$23,500","valueNumber":23500,"valueBoolean":null,"winner":true},{"entityId":"cmr8tbivc001p10naffp0q352","valueText":"$7,000","valueNumber":7000,"valueBoolean":null,"winner":false}]},{"id":"cmr9q9tx9004juynof3l22vrh","slug":"typical-employer-match","name":"Typical Employer Match","unit":"% of salary","category":"Employer Benefits","dataType":"number","higherIsBetter":true,"values":[{"entityId":"cmr8tbiv8001n10nazruqgds3","valueText":"3-6% average","valueNumber":4.5,"valueBoolean":null,"winner":true},{"entityId":"cmr8tbivc001p10naffp0q352","valueText":"0% (N/A)","valueNumber":0,"valueBoolean":null,"winner":false}]},{"id":"cmr9q9txo004puynoi4gomiih","slug":"average-annual-fee","name":"Average Annual Fee","unit":"% of assets","category":"Costs","dataType":"number","higherIsBetter":false,"values":[{"entityId":"cmr8tbiv8001n10nazruqgds3","valueText":"0.50-1.00%","valueNumber":0.75,"valueBoolean":null,"winner":false},{"entityId":"cmr8tbivc001p10naffp0q352","valueText":"0.10-0.30%","valueNumber":0.2,"valueBoolean":null,"winner":true}]},{"id":"cmr9q9ty2004vuynov4goyxtu","slug":"investment-options-available","name":"Investment Options Available","unit":"typical count","category":"Investment Control","dataType":"number","higherIsBetter":true,"values":[{"entityId":"cmr8tbiv8001n10nazruqgds3","valueText":"20-40 funds","valueNumber":30,"valueBoolean":null},{"entityId":"cmr8tbivc001p10naffp0q352","valueText":"Unlimited","valueNumber":null,"valueBoolean":null}]},{"id":"cmr9q9tyg0051uynoqldd18t8","slug":"roth-tax-free-growth-option","name":"Roth Tax-Free Growth Option","unit":"available","category":"Tax Features","dataType":"text","higherIsBetter":true,"values":[{"entityId":"cmr8tbiv8001n10nazruqgds3","valueText":"Yes (Roth 401k)","valueNumber":null,"valueBoolean":null},{"entityId":"cmr8tbivc001p10naffp0q352","valueText":"Yes (Roth IRA)","valueNumber":null,"valueBoolean":null}]},{"id":"cmr9q9tyv0057uynops1cmuwa","slug":"required-minimum-distribution-age","name":"Required Minimum Distribution Age","unit":"years","category":"Withdrawal Rules","dataType":"number","higherIsBetter":false,"values":[{"entityId":"cmr8tbiv8001n10nazruqgds3","valueText":"73","valueNumber":73,"valueBoolean":null},{"entityId":"cmr8tbivc001p10naffp0q352","valueText":"73","valueNumber":73,"valueBoolean":null}]},{"id":"cmr9q9tz8005duynofn7al40h","slug":"loan-borrowing-allowed","name":"Loan Borrowing Allowed","unit":"max amount","category":"Liquidity","dataType":"text","higherIsBetter":true,"values":[{"entityId":"cmr8tbiv8001n10nazruqgds3","valueText":"Up to $69,000 or 50%","valueNumber":69000,"valueBoolean":null},{"entityId":"cmr8tbivc001p10naffp0q352","valueText":"Not permitted","valueNumber":null,"valueBoolean":null}]}],"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."},{"question":"Can I withdraw early without penalties?","answer":"Both accounts impose a 10% early withdrawal penalty plus income taxes before age 59½, with exceptions: 401(k) allows hardship withdrawals (medical, housing, education), substantially equal periodic payments (SEPP), and Rule of 55 if you separate from service at 55+. IRAs allow early withdrawal for first-time home purchases ($10,000 lifetime), education, and medical expenses. Traditional IRA contributions (not earnings) can be withdrawn anytime penalty-free."},{"question":"What's the difference between traditional and Roth?","answer":"Traditional accounts (401k/IRA) offer immediate tax deductions but require paying income tax on withdrawals in retirement. Roth accounts (Roth 401k/Roth IRA) use after-tax contributions but grow tax-free with tax-free withdrawals in retirement. Roth is advantageous if you expect higher tax rates in retirement; traditional is better if you expect lower rates. Roth IRA has no RMDs, making it superior for leaving tax-free wealth to heirs."}],"relatedComparisons":[{"slug":"401k-vs-ira","title":"401(k) vs IRA","category":"finance"},{"slug":"bitcoin-vs-ethereum","title":"Bitcoin vs Ethereum","category":"economy"},{"slug":"netflix-vs-disney-plus","title":"Netflix vs Disney+","category":"companies"},{"slug":"us-economy-vs-china-economy","title":"US Economy vs China Economy","category":"economy"},{"slug":"stock-market-vs-real-estate","title":"Stock Market vs Real Estate","category":"economy"},{"slug":"capital-one-vs-lendingclub)","title":"Capital One vs LendingClub","category":"finance"},{"slug":"sofi-vs-discover-personal-loans)","title":"SoFi Personal Loans vs Discover Personal Loans","category":"finance"},{"slug":"roth-ira-vs-401k)","title":"Roth IRA vs 401(k)","category":"finance"},{"slug":"capital-one-vs-lending-club)","title":"Capital One vs LendingClub","category":"finance"},{"slug":"credit-card-vs-debit-card","title":"Credit Card vs Debit Card","category":"finance"},{"slug":"checking-account-vs-savings-account","title":"Checking Account vs Savings Account","category":"finance"},{"slug":"index-fund-vs-active-fund","title":"Index Fund vs Active Fund","category":"finance"}],"relatedBlogPosts":[{"slug":"are-chase-and-capital-one-affiliated","title":"Are Chase and Capital One Affiliated?","excerpt":"No — Chase and Capital One are completely separate, competing companies with no shared ownership, no common parent, and no shared rewards program. 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