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Is ira and 401k the same thing??

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Employee Tax Expert

Is ira and 401k the same thing??

No, they are not the same type of retirement plan.

IRA: Individual Retirement Plan, is one that you setup on your own, outside of your employer. Open an account with banks, mutual funds or brokerages. Contributions can be deductible on your tax return.

401k: These are employer-sponsored plans. Contributions are made pre-tax via payroll deductions. Contributions are reflected on your W-2. 

Distributions from both plans would be reported on a 1099-R and entered into your tax return.

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