401(k) vs IRA: Which Is Right for You?
A 401(k) is an employer-sponsored plan that may include a match and higher limits. An IRA is an individual account that may offer broader investment choices. Many people use both in a deliberate order.
Key differences
| Feature | 401(k) | IRA |
|---|---|---|
| Who opens it | Employer | Individual |
| 2026 employee contribution limit | $24,500 | $7,500 combined Roth + Traditional |
| Employer match | Possible | No employer match |
| Investment choices | Plan menu | Provider menu |
A practical decision order
Review the employer match first, then compare fees and investment choices. After capturing available match money, an IRA can provide additional tax diversification or flexibility. Your income, eligibility, and plan rules determine the right order.
Frequently asked questions
Should I max out my 401(k) or IRA first?
A common framework is to capture the full employer match, then compare IRA and 401(k) costs, features, and tax treatment for the remaining savings.
Can I have both a 401(k) and an IRA?
Yes. Workplace-plan coverage can affect Traditional IRA deductibility and Roth IRA eligibility, so check current IRS rules.
Sources
Gleefund explains general retirement-account concepts and provides estimates. It does not provide financial, tax, or legal advice. See our disclaimer and methodology. Check the current IRS rules before acting.
Figures current as of 2026-09-25. Found an error? Contact us.