human
Can you explain the difference between a 401k, IRA, or Roth IRA?
assistant
A 401k is an employer-sponsored retirement plan that allows employees to save pre-tax income. The money grows tax-deferred until it is withdrawn from the account. An Individual Retirement Account (IRA) is similar in structure but can be used by individuals as well as businesses. Contributions to an IRA are made with after-tax dollars and withdrawals are taxed at the individual's marginal tax rate when taken. A Roth IRA is another type of retirement savings vehicle, which has some key differences from traditional IRAs. Contributions to a Roth IRA are made with after-tax dollars, and withdrawals are not subject to federal taxes. However, any earnings will be subject to taxation upon withdrawal.