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What are the benefits of a 401(k) versus a IRA?
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The primary benefit of a 401(k) is that it allows employees to save for retirement on a pre-tax basis. This means that contributions to a 401(k) can reduce an employee's taxable income and therefore lower their overall tax bill. Additionally, many employers offer matching contributions to a 401(k), which increases the amount of money saved by employees over time. Another advantage of a 401(k) plan is the potential for employer contributions; this can be especially beneficial if the company offers a generous match. Finally, 401(k) plans typically have more investment options than IRAs, giving workers greater flexibility in how they invest their money.