human
Can you explain the difference between a 401k and an IRA?
assistant
A 401(k) is a retirement savings plan offered by employers. It allows employees to save pre-tax money from their salary, up to certain limits set by the Internal Revenue Service (IRS). Contributions to a 401(k) are usually made through payroll deductions. An IRA is an Individual Retirement Account that allows individuals to save for retirement without being taxed until withdrawal. Contributions to IRAs can be made with after-tax dollars. Both types of accounts offer tax benefits and financial security in retirement. However, there are differences in terms of how they work and which one may be more beneficial for you depending on your individual circumstances.