Quick answer: 401(k)s are workplace retirement plans while IRAs are individual retirement arrangements. Contribution rules, investment choices, employer matching, eligibility, fees, and tax treatment can differ.
Who establishes the account?
A 401(k) is sponsored by an employer. An IRA is established by an individual with a financial institution that offers eligible IRA accounts.
Employer matching
A workplace plan may include employer contributions under its plan formula. An IRA does not have an employer match in the same way.
Investment choices and fees
A 401(k) typically offers a plan-selected investment menu. An IRA provider may offer a broader or different range. Costs vary, so compare actual plan and account fees.
Rules change
Contribution limits, income rules, deduction eligibility, withdrawal rules, and tax provisions can change. Verify current IRS guidance before making tax-sensitive decisions.
Explore the Retirement Basics Hub →
Methodology and limitations
This page explains general decision factors and does not predict an individual credit-score change, investment result, tax outcome, or ideal cash target. Account terms, scoring models, tax rules, and household circumstances vary and can change.
Reviewed September 26, 2026. General financial education only; not individualized financial, tax, legal, investment, or credit advice.