Which is better to have, a 401k or IRA?

Question

When your job say they will match a certain percentage to your 401k, is that percentage added each year or when it is time for you to retire?

Answer 1

I like both but for different reasons.

With the IRA, you have more options of different types of investments, such more stocks, mutual funds, bonds to choose from.

The 401(k), the plans are a bit more limited, but if a company matches your contributions, you don't want to give up "free" money. The money that the company contributes, you want to match up to that percentage. Some companies won't let you keep your contributions until you are fully vested, meaning you have to work a minimum of years before you are those company contributions are yours.

If your company doesn't match, I usually opt out of the plan and start an IRA.

Answer 2

It is better to have a matching 401k, because the matching part is like a gift, except you have to work for it.  

It is usally added each year.  It becomes available to you when you are "vested".  Maximum is 5 years to become "vested" in your 401k matching portion.  

IRA is a tax-avoidance vehicle.  401k will get taxed when it is received.  You can defer tax with IRAs or get tax free earnings with Roth IRAs.

Answer 3

i believe its each year, and as for the headline...I would go with an IRA, can be risky but could have a good turn out. Annuites and mutual funds can be good too.

it really all depends on what suits you

Answer 4

The 401k is much better.

The match is "free" money so you definitely want to contribute an amount that will get you the maximum match.  

You can put many times more in a 401k than an IRA, over the amount that is matched,  if you want.

You can borrow against a 401k for medical emergencies, hardship, some school, or purchase of a first home. But that is not a good thing to do because it stops your deposits and then you don't get more matching funds until the loan is paid back.  But an emergency is an emergency.

My company matched with every deposit. It helps grow it fast.

A 401k deposit goes in pre-tax.

With an IRA you have to pay the tax then declare the deduction on your income tax and get it back then. So initially it is more out of pocket.

And my company has a provision where once it was in the 401k it could be moved to a "self directed IRA" so investment options weren't a problem.

Answer 5

They're added each time you get paid when your own contributions are added.  You should have both, an IRA as well as your company retirement plan.