A 401(k) and an IRA are both tax-advantaged retirement savings accounts, but they differ in who sets them up, who can contribute, and how much you can put in each year. Understanding the distinction is the first step in knowing which account applies to your situation.
Side by side
401(k)
Who sets it up
Your employer
Employer match
Possible, varies by employer
2026 contribution limit
$24,500 / $32,500 age 50+
Tax treatment
Pre-tax (Traditional) or after-tax (Roth 401(k))
Income limit to contribute
None
IRA
Who sets it up
You, independently
Employer match
None
2026 contribution limit
$7,500 / $8,600 age 50+
Tax treatment
Traditional (pre-tax) or Roth (after-tax)
Income limit to contribute
Roth IRA has income eligibility limits
Which applies to you
If your employer offers a 401(k), that is typically the starting point, especially if there is an employer match. A match is additional money your employer contributes based on your own contributions, and it is one of the most direct ways to accelerate retirement savings.
An IRA is opened independently through a brokerage or financial institution. It is available to anyone with earned income, regardless of employer, making it a useful supplement to a 401(k) or a primary vehicle for those without an employer-sponsored plan.
You can contribute to both in the same year, subject to each account’s limits. ‘Retirement Preparation for Generations’ covers both account types and the rules governing each in plain language.
You’ll find the information you need at
therealrfst.com