Is The 401K The Same As An IRA?

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   David G. Pipes, CLU®, RICP®

   Business Development Officer, T.D. McNeil Insurance Services, Fresno, California

   Both of these plans involve pre-tax contributions.  A 401(k) is an employer sponsored plan.  It is compliant with ERISA and is governed by a “plan.”  An Individual Retirement Account (IRA) is an individual plan that is not related to your employment.  The limits to the program are prescribed by the Internal Revenue Code.  The 401(k) plan may have employer contributions, the IRA does not.  The 401(k) plan has much higher limits that participants can make to the plan.  A non-working spouse can have an IRA.

   Answered on August 19, 2014

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