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One of the main differences between an IRA and a 401(k) is that 401(k)'s are usually taken out pretax and matched by your employer. 401(k)'s are working savings accounts and money is held in them as long as you are working for your employeer or you can transfer these funds to a new employer. An IRA is easier to set up and maintain because often times it is not set up stricktly through the employer.

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A major difference between an IRA and a 401(k) is that the regulations of an IRA is not as strictly maintained as a 401(k) by the employers.

What is the significance of an IRA and 401(k)?

An IRA is a savings account of a working individual, which is maintained by an individual even after the retirement of an employee. A 401(k), on the other hand, is sponsored by an employer.

The regulations regarding following the procedures of a 401(k) account by an employer are very strict and punitive; however, an IRA account is not maintained by an employer.

Hence, the difference between an IRA and 401(k) is aforementioned.

Learn more about an IRA and 401(k) here:

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