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What is the difference between a 401k retirement plan and an IRA?
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The primary difference between a 401k retirement plan and an IRA is that a 401k plan is an employer-sponsored retirement plan, whereas an IRA (Individual Retirement Account) is an individual retirement plan. A 401k plan allows you to contribute pre-tax dollars from your paycheck, up to a certain limit, and your employer may match a portion of those contributions. An IRA, on the other hand, is funded with after-tax dollars, and you are usually not able to deduct your contributions. Additionally, the contributions you can make to an IRA are typically much lower than those to a 401k.