An IRA is an individual retirement account. A 401(k) , on the other hand, is a corporate retirement plan sponsored by a business. As 401(k) administration can be expensive, these types of plans are usually only offered by larger employers, although this is not always the case. A 401(k) has higher contribution limits than an IRA, and it may also offer loans to participants. However, 401(k) plans usually have limited investment options, whereas IRAs are open to nearly any type of investment.