Thursday, February 20, 2014
401(k)s and IRAs are two pre-tax retirement planning devices with a shared goal, but important differences. These differences should be considered when deciding which account is the better choice. These differences include:
- 401(k)s are created by an employer, while IRAs are created by an individual
- 401(k)s offer the option for matching contributions by the employer
- 401(k)s can offer higher limits for contributions
- IRAs allow married account holders to designate a non-spouse beneficiary without spousal consent
- Loans may be taken from 401(k) accounts in some circumstances
See Doresa Banning, 401(k) vs. IRA: 5 Key Differences, Fox Business, Jan. 27, 2014.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.