{"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 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 Traditional IRA contributions (not earnings) can be withdrawn anytime penalty-free."},{"question":"What's the difference between traditional and Roth?","answer":"Traditional accounts (401k/IRA) offer immediate tax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."}],"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":"2026-07-06T21:24:17.406Z","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","cssSelector":["#faq",".faq-item"]},"mainEntity":[{"@type":"Question","name":"Can I have both a 401(k) and IRA?","acceptedAnswer":{"@type":"Answer","text":"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.","inLanguage":"en-US","url":"https://www.aversusb.net/compare/401k-vs-ira)"}},{"@type":"Question","name":"What happens to my 401(k) if I leave my job?","acceptedAnswer":{"@type":"Answer","text":"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.","inLanguage":"en-US","url":"https://www.aversusb.net/compare/401k-vs-ira)"}},{"@type":"Question","name":"Which account should I fund first?","acceptedAnswer":{"@type":"Answer","text":"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.","inLanguage":"en-US","url":"https://www.aversusb.net/compare/401k-vs-ira)"}},{"@type":"Question","name":"Can I withdraw early without penalties?","acceptedAnswer":{"@type":"Answer","text":"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.","inLanguage":"en-US","url":"https://www.aversusb.net/compare/401k-vs-ira)"}},{"@type":"Question","name":"What's the difference between traditional and Roth?","acceptedAnswer":{"@type":"Answer","text":"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.","inLanguage":"en-US","url":"https://www.aversusb.net/compare/401k-vs-ira)"}}]}}