Retirement Basics: 401(k) vs IRA (And What to Do First)

Understand common retirement accounts, matching, contribution priorities, and simple next steps.

The core difference

• A 401(k) is typically employer-sponsored; an IRA is an individual account you open yourself.
• Both can be powerful tools depending on match, fees, and contribution limits.

What to do first

• If your employer offers a match, many people prioritize contributing enough to get the full match.
• Then compare IRA options (fees, investment choices) and return to the 401(k) if needed.

Roth vs Traditional basics

• Traditional contributions may reduce taxable income today; Roth contributions use after‑tax dollars but can offer tax‑free withdrawals under certain rules.
• Your best option depends on income, tax bracket, and retirement plans.

A simple priority order

• 1) 401(k) to match
  2) High‑interest debt
  3) IRA / additional 401(k)
  4) Taxable investing (if applicable)

Keep it simple

• Automate contributions and choose diversified funds with reasonable fees.
• Review beneficiaries and contribution amounts annually.

Next step

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Disclaimer: This article is for informational purposes only and does not constitute financial, tax, or legal advice.