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

A 401 (k) is an employer-sponsored retirement plan. An IRA is an individual retirement account that individuals open through a bank or a brokerage firm. Both a 401 (k) and an IRA can invest in stocks, bonds, and securities. Most IRAs and 401 (k)s do not allow withdrawals before the owner reaches the age of 59½.

What is a 401(k) & IRA?

Individuals can save for retirement through 401 (k) plans and individual retirement accounts (IRAs). A 401 (k) is an employer-sponsored retirement plan. An IRA is an individual retirement account that individuals open through a bank or a brokerage firm. Both a 401 (k) and an IRA can invest in stocks, bonds, and securities.

Can I have a 401(k) and Ira?

Yes, you can have both accounts and many people do. The traditional individual retirement account (IRA) and 401 (k) provide the benefit of tax-deferred savings for retirement. Depending on your tax situation, you may also be able to receive a tax deduction for the amount you contribute to a 401 (k) and IRA each tax year.