Can a Roth IRA be a 401(k)?

The money you contribute to a Roth IRA could come from a job, but it could also be a rollover from a Roth 401 (k) plan, a conversion from an existing traditional IRA or 401 (k) plan, a spousal contribution, or other transfer. Over time, the investments in your Roth IRA could earn a return and that money grows tax-free.

Should you fund a 401(k) or an IRA?

Funding an IRA is particularly beneficial if your workplace does not offer a Roth 401 (k) option and you qualify to contribute to a Roth IRA – that way at least some of your savings will provide tax-free withdrawals in retirement. 3. Return to funding your 401 (k): Employer-sponsored retirement plans have much higher contribution limits than IRAs.

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

IRA: IRAs have lower contribution limits than 401 (k)s. In 2024, individuals can contribute up to $7,000 in an IRA (or $8,000 if you’re age 50 or older). That’s $16,000 less than the maximum allowed in a 401 (k) if you’re under 50, or $22,500 less if you’re over 50. There are no “matching” contributions for IRAs.