human
I'm a little confused about the difference between a 401k and a IRA. Which one is better?
assistant
A 401(k) is typically offered by an employer, while an IRA is an individual retirement account that allows you to save for retirement. The main difference between the two is the way in which they are taxed. With a 401(k), contributions are made with pre-tax dollars, meaning your money is not subject to income taxes when it is deposited into the plan. An IRA, on the other hand, does not offer this benefit. Instead, withdrawals from the account are taxed as ordinary income. Ultimately, the decision of whether or not to choose a 401(k) or IRA will depend on your financial situation and goals.