Roth IRA vs 401(k)

Imagine two different treasure chests designed to help you save for retirement.

Both help you invest for the future.
Both offer tax advantages.
Both can hold investments like:

• stocks
• ETFs
• index funds
• mutual funds

But they work differently.

A 401(k) is usually connected to your job.

Money is often automatically taken from your paycheck and invested for retirement.

Many employers also offer:

A company match.

That means your employer may add extra money to your retirement account.

A Roth IRA usually works independently from your employer.

You open it yourself through a brokerage company.

The biggest difference is often taxes.

Traditional 401(k)s usually use:

• pre-tax money today
• taxes later in retirement

Roth IRAs usually use:

• after-tax money today
• potentially tax-free withdrawals later

Many investors like Roth IRAs because:

• future growth may be tax-free
• long-term compound growth can become powerful

Many investors like 401(k)s because:

• contributions are automatic
• employer matching can accelerate savings

Some people even use both accounts together.

In simple terms:

A 401(k) is a retirement account through your job, while a Roth IRA is a personal retirement account that may allow tax-free withdrawals later.