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

IRA

An Individual Retirement Account, a saving tool that allows individuals to set aside money for retirement with tax advantages.

401k

A retirement savings plan that is sponsored and set up by an employer for its employees; like other retirement plans, there are strict rules as to when the money can be withdrawn without a penalty and strict contribution limits which change from year to year.

Distinguish between Individual Retirement Accounts (IRA) and 401(k) plans, focusing on their respective tax consequences.

Verified Answer

Jameson Asira5 days ago

Final Answer :

An IRA is opened by an individual and a 401k is sponsored by an employer for an employee.

Learning Objectives

Distinguish between Individual Retirement Accounts (IRA) and 401(k) plans, focusing on their respective tax consequences.

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

Definitions

Learning Objectives

Learning Objectives

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