{"slug":"401k-vs-ira","title":"401(k) vs IRA","url":"https://www.aversusb.net/compare/401k-vs-ira","faqCount":5,"faqs":[{"question":"Can I have both a 401(k) and an IRA?","answer":"Yes, you can contribute to both in the same year. However, if you have a 401(k) and want to contribute to a Traditional IRA, your Traditional IRA deduction may be limited based on your Modified Adjusted Gross Income (MAGI). Roth IRA contributions have separate MAGI limits. For example, in 2025, a single filer with a 401(k) cannot deduct Traditional IRA contributions if MAGI exceeds $77,000, but can still contribute to a Roth IRA if MAGI is below $146,000."},{"question":"What happens to my 401(k) if I leave my job?","answer":"When you leave your job, you have several options: (1) leave the money in your former employer's plan if the balance exceeds $5,000, (2) roll it over into an IRA (giving you more investment choices), (3) roll it into your new employer's 401(k) if available, or (4) take a lump-sum distribution (which triggers income tax and a 10% penalty unless you're 55+ and separated from service). Most financial advisors recommend rolling into an IRA to gain investment flexibility."},{"question":"Is a Roth 401(k) different from a Roth IRA?","answer":"Yes. Both use after-tax contributions with tax-free growth, but Roth 401(k)s have higher contribution limits ($23,500 in 2025), required minimum distributions at age 73, and limited investment options. Roth IRAs have lower contribution limits ($7,000 in 2025), no required distributions in your lifetime, unlimited investments, and allow penalty-free withdrawal of contributions anytime. Roth IRAs are generally preferred for flexibility; Roth 401(k)s suit higher earners who max out regular 401(k)s."},{"question":"Which account should I fund first?","answer":"If your employer offers a 401(k) with matching, contribute enough to capture the full match first (this is free money). Then, if eligible, max out a Roth IRA for its flexibility and lower fees. Finally, return to max out your 401(k) if you have remaining funds. If no employer match is available, prioritize the IRA for lower fees and more investment options."},{"question":"What are Required Minimum Distributions (RMDs) and how do they differ?","answer":"Both 401(k)s and Traditional IRAs require you to begin withdrawing funds at age 73 (as of 2023 SECURE 2.0 Act). The amount is calculated based on your account balance and life expectancy tables. Roth IRAs have no RMDs during the account holder's lifetime. Failing to take an RMD incurs a 25% penalty on the amount not withdrawn (reduced to 10% if corrected within 2 years). This is a key advantage of Roth accounts for those who don't need the income."}],"faqPageSchema":{"@context":"https://schema.org","@type":"FAQPage","@id":"https://www.aversusb.net/compare/401k-vs-ira#faq","url":"https://www.aversusb.net/compare/401k-vs-ira","inLanguage":"en-US","name":"401(k) vs IRA — FAQ","description":"Frequently asked questions about 401(k) vs IRA","dateModified":"2026-10-19T12:16:21.402Z","author":{"@type":"Organization","@id":"https://www.aversusb.net/#organization","name":"A Versus B"},"publisher":{"@type":"Organization","@id":"https://www.aversusb.net/#organization","name":"A Versus B"},"isPartOf":{"@type":"Article","@id":"https://www.aversusb.net/compare/401k-vs-ira#article"},"license":"https://creativecommons.org/licenses/by/4.0/","speakable":{"@type":"SpeakableSpecification","@id":"https://www.aversusb.net/compare/401k-vs-ira#faq-speakable","cssSelector":[".faq-answer"]},"mainEntity":[{"@type":"Question","@id":"https://www.aversusb.net/compare/401k-vs-ira#q1","name":"Can I have both a 401(k) and an IRA?","answerCount":1,"acceptedAnswer":{"@type":"Answer","@id":"https://www.aversusb.net/compare/401k-vs-ira#a1","text":"Yes, you can contribute to both in the same year. However, if you have a 401(k) and want to contribute to a Traditional IRA, your Traditional IRA deduction may be limited based on your Modified Adjusted Gross Income (MAGI). Roth IRA contributions have separate MAGI limits. For example, in 2025, a single filer with a 401(k) cannot deduct Traditional IRA contributions if MAGI exceeds $77,000, but can still contribute to a Roth IRA if MAGI is below $146,000.","inLanguage":"en-US","url":"https://www.aversusb.net/compare/401k-vs-ira","upvoteCount":1,"author":{"@type":"Organization","@id":"https://www.aversusb.net/#organization","name":"A Versus B"}}},{"@type":"Question","@id":"https://www.aversusb.net/compare/401k-vs-ira#q2","name":"What happens to my 401(k) if I leave my job?","answerCount":1,"acceptedAnswer":{"@type":"Answer","@id":"https://www.aversusb.net/compare/401k-vs-ira#a2","text":"When you leave your job, you have several options: (1) leave the money in your former employer's plan if the balance exceeds $5,000, (2) roll it over into an IRA (giving you more investment choices), (3) roll it into your new employer's 401(k) if available, or (4) take a lump-sum distribution (which triggers income tax and a 10% penalty unless you're 55+ and separated from service). Most financial advisors recommend rolling into an IRA to gain investment flexibility.","inLanguage":"en-US","url":"https://www.aversusb.net/compare/401k-vs-ira","upvoteCount":1,"author":{"@type":"Organization","@id":"https://www.aversusb.net/#organization","name":"A Versus B"}}},{"@type":"Question","@id":"https://www.aversusb.net/compare/401k-vs-ira#q3","name":"Is a Roth 401(k) different from a Roth IRA?","answerCount":1,"acceptedAnswer":{"@type":"Answer","@id":"https://www.aversusb.net/compare/401k-vs-ira#a3","text":"Yes. Both use after-tax contributions with tax-free growth, but Roth 401(k)s have higher contribution limits ($23,500 in 2025), required minimum distributions at age 73, and limited investment options. Roth IRAs have lower contribution limits ($7,000 in 2025), no required distributions in your lifetime, unlimited investments, and allow penalty-free withdrawal of contributions anytime. Roth IRAs are generally preferred for flexibility; Roth 401(k)s suit higher earners who max out regular 401(k)s.","inLanguage":"en-US","url":"https://www.aversusb.net/compare/401k-vs-ira","upvoteCount":1,"author":{"@type":"Organization","@id":"https://www.aversusb.net/#organization","name":"A Versus B"}}},{"@type":"Question","@id":"https://www.aversusb.net/compare/401k-vs-ira#q4","name":"Which account should I fund first?","answerCount":1,"acceptedAnswer":{"@type":"Answer","@id":"https://www.aversusb.net/compare/401k-vs-ira#a4","text":"If your employer offers a 401(k) with matching, contribute enough to capture the full match first (this is free money). Then, if eligible, max out a Roth IRA for its flexibility and lower fees. Finally, return to max out your 401(k) if you have remaining funds. If no employer match is available, prioritize the IRA for lower fees and more investment options.","inLanguage":"en-US","url":"https://www.aversusb.net/compare/401k-vs-ira","upvoteCount":1,"author":{"@type":"Organization","@id":"https://www.aversusb.net/#organization","name":"A Versus B"}}},{"@type":"Question","@id":"https://www.aversusb.net/compare/401k-vs-ira#q5","name":"What are Required Minimum Distributions (RMDs) and how do they differ?","answerCount":1,"acceptedAnswer":{"@type":"Answer","@id":"https://www.aversusb.net/compare/401k-vs-ira#a5","text":"Both 401(k)s and Traditional IRAs require you to begin withdrawing funds at age 73 (as of 2023 SECURE 2.0 Act). The amount is calculated based on your account balance and life expectancy tables. Roth IRAs have no RMDs during the account holder's lifetime. Failing to take an RMD incurs a 25% penalty on the amount not withdrawn (reduced to 10% if corrected within 2 years). This is a key advantage of Roth accounts for those who don't need the income.","inLanguage":"en-US","url":"https://www.aversusb.net/compare/401k-vs-ira","upvoteCount":1,"author":{"@type":"Organization","@id":"https://www.aversusb.net/#organization","name":"A Versus B"}}}]}}