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When it comes to saving for retirement, there are a lot of options out there. Two of the most popular are 401k plans and IRA plans. So how do you know which one is right for you?
When to Choose a 401k Over an IRA
If your employer offers to match contributions made to a 401k, it's generally advisable to enroll in the 401k rather than an IRA. This is because employer matches are essentially free money, and you'll want to take advantage of that as much as possible.
If You're Self-Employed
If you're self-employed, you may not be able to contribute to a 401k. In this case, an IRA would be the better option.
When to Choose an IRA Over a 401k
There are a few reasons why you might not be eligible for a 401k plan. Perhaps you're self-employed, or you work for a small company that doesn't offer a 401k. Or, maybe you're already participating in another retirement savings plan, such as a 403b or 457. In these cases, an IRA may be your best option.
If You're age 50 or Older
If you're age 50 or older, you may be able to contribute more to an IRA than a 401k. For example, in 2019, the contribution limit for IRAs is $6,000, while the contribution limit for 401ks is $19,000. This could be beneficial if you're looking to save more money for retirement.
When to Choose a 401k Over an IRA
If your employer offers to match contributions made to a 401k, it's generally advisable to enroll in the 401k rather than an IRA. This is because employer matches are essentially free money, and you'll want to take advantage of that as much as possible.
If You're Self-Employed
If you're self-employed, you may not be able to contribute to a 401k. In this case, an IRA would be the better option.
When to Choose an IRA Over a 401k
There are a few reasons why you might not be eligible for a 401k plan. Perhaps you're self-employed, or you work for a small company that doesn't offer a 401k. Or, maybe you're already participating in another retirement savings plan, such as a 403b or 457. In these cases, an IRA may be your best option.
If You're age 50 or Older
If you're age 50 or older, you may be able to contribute more to an IRA than a 401k. For example, in 2019, the contribution limit for IRAs is $6,000, while the contribution limit for 401ks is $19,000. This could be beneficial if you're looking to save more money for retirement.
