human
Can you explain the difference between a 401k and an IRA?
assistant
A 401(k) is a retirement savings plan offered by employers that allows employees to save pre-tax dollars. Contributions are typically made through salary deductions, so employees can take advantage of tax breaks when they make withdrawals in retirement. An Individual Retirement Account (IRA) is similar but is funded with after-tax dollars. Contributions are not subject to income taxes until withdrawal, at which point the funds are taxed as regular income.