human
I'm a little confused about the difference between an IRA and a 401k. Can you help me out?
assistant
An Individual Retirement Account (IRA) is a retirement savings plan that allows individuals to save for retirement, either on their own or through their employer. It can be funded with pre-tax money, meaning that your contributions are made before taxes are taken out of your paycheck. A 401(k) is similar, but it’s offered by employers as part of their benefits package. Contributions to a 401(k) are typically made after taxes are taken out of your paycheck. Both types of plans offer tax advantages in terms of how they are taxed upon withdrawal.