Understanding the Critical Differences Between 401(k)s and IRAs for Building Your Retirement Portfolio
Major Difference Between 401(k)s and IRAs
There are lots of differences between these retirement plans, but here’s one that isn’t well known. Some of the major differences between 401(k)s and IRAs.
Investment Flexibility
401(k): Limited to a small menu of investment funds. Good for autopilot investing.
IRA: Allows you to invest in virtually any stocks, bonds, mutual funds, or ETFs.
Early Withdrawals
401(k): Allows early withdrawals under certain conditions, like separation from service.
IRA: More flexibility to withdraw for a first-time home purchase or higher education expenses.
- IRAs are more flexible for investments and early withdrawals compared to 401(k)s.
Supplementing your 401(k) with an IRA can enhance your retirement portfolio after maximizing employer matches.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.