human
Can you explain the difference between a 401k and an IRA?
assistant
A 401k is a retirement savings plan that is sponsored by an employer. Contributions to a 401k are made on an after-tax basis, meaning that contributions reduce your taxable income for the year. An IRA (Individual Retirement Account) is a tax-deferred investment vehicle designed to help individuals save for retirement. Contributions to an IRA are not taxed until they are withdrawn in retirement, which can be at any time without penalty.