Both 401(k)s and IRAs have valuable tax benefits, and you can contribute to both at the same time. The main difference between 401(k)s and IRAs is that employers offer 401(k)s, but individuals open IRAs (using brokers or banks). IRAs typically offer more investments; 401(k)s allow higher annual contributions.
Just so, is an IRA the same as a retirement plan?
An individual retirement account (IRA) allows you to save money for retirement in a tax-advantaged way. An IRA is an account set up at a financial institution that allows an individual to save for retirement with tax-free growth or on a tax-deferred basis.
In this regard, do I need an IRA if I have a 401K?
While a 401(k) or other employer-sponsored retirement plan can be considered the backbone of your retirement savings, there’s a good case for having an IRA as well. An IRA—either a traditional or Roth—often offers greater investment choice and flexibility.