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What is the difference between a 401k plan and an IRA?

Jan 06, 2012 by Carrin from San Diego, CA in  |  Flag
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In the most basic of terms, your 401(k) is a plan you participate in controlled by your employer with set specific investment options. You do not "own" the money. In an IRA you own the money and generally have a much broader selection of investment options and the ability to get professional advice. Also, the contribution limits are different. Both allow for "catch up" contributions for those over age 50+, but the amount you can contribute to an IRA for catch up or tax deferral is much less than what is allowed in 401(K).

Here is a helpful link on recent changes to contribution and income limitations for 401k and IRA

1 Comment   |  Flag   |  Jan 07, 2012 from Boston, MA
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