401k and Roth IRA are both retirement savings plans, but they have some important differences. Here's a comparison between the two: - Contribution limits: The contribution limit for a 401k plan is typically higher than that of a Roth IRA, but both plans have limits on the amount that can be contributed annually. - Tax treatment: Contributions to a traditional 401k plan are made on a pre-tax basis, which reduces your taxable income for the year. Distributions from a traditional 401k plan are taxed as ordinary income. In contrast, contributions to a Roth IRA are made on a post-tax basis, and distributions from a Roth IRA are generally tax-free, provided that certain conditions are met. - Investment options: 401k plans typically offer a wider range of investment options, including mutual funds, exchange-traded funds (ETFs), and individual stocks. Roth IRAs typically offer a more limited selection of investment options. - Employer contributions: Many employers offer matching contributions to their employees' 401k plans, but not to Roth IRAs. - Withdrawal rules: Withdrawals from a traditional 401k plan before age 59 1/2 may result in a 10% early withdrawal penalty, as well as ordinary income tax on the distribution. Distributions from a Roth IRA are generally tax-free and penalty-free, provided that certain conditions are met. - Eligibility: In general, anyone with earned income can contribute to a Roth IRA, but contributions may be limited for high-income taxpayers. To be eligible for a 401k plan, you must be an employee of a company that sponsors the plan. Both 401k plans and Roth IRAs have their own unique advantages and disadvantages, and the best choice for you will depend on your individual financial situation and goals. It's recommended to consult with a financial advisor for personalized guidance on choosing the best retirement savings plan for you.