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What is the difference between a 401k and a Roth IRA?
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The main difference between a 401k and a Roth IRA is the taxation of contributions and withdrawals. Contributions to a 401k are made pre-tax, meaning that they lower your taxable income and you only pay taxes when you withdraw the money. With a Roth IRA, contributions are made with after-tax money, but withdrawals during retirement are tax-free. Furthermore, 401k plans have employer contributions and have higher annual contribution limits than Roth IRAs.