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What are the advantages of a 401(k) plan vs. a traditional IRA?
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The primary advantage of a 401(k) plan over a traditional IRA is that it offers tax-deferred growth and distributions. With a 401(k), contributions are made with pre-tax income, meaning you pay taxes on them when you withdraw the money in retirement. With an IRA, contributions are made with after-tax income, so you pay taxes when you withdraw the money. Additionally, 401(k) plans often offer employer matches to help increase your savings rate. Finally, 401(k) plans have higher contribution limits than IRAs.