 TITLE: What Is the Difference Between a 401(k) and an IRA? CONTENT: How to Choose Between a 401(k) and IRA\n--------------------------------------\nClearly both 401(k) plans and IRAs have their own advantages and disadvantages, but either can be crucial to helping you start saving for your retirement early. The sooner you do, the more money you'll accumulate for the years when you're no longer working. Some rules of thumb when deciding where to put your money:\nIf a 401(k) plan is available to you, maxing out your allowable contribution can be wise (as long as doing so won't impact your ability to make your bill payments). A 401(k) plan allows for higher contributions than IRAs, and any matched funds your employer contributes are essentially free money.\nHave extra money to contribute after you've maxed out your 401(k)? As long as you meet the eligibility requirements, you can also contribute to an IRA.\nIn the event that a 401(k) plan is not an option, choose the right IRA for you. In general, a traditional IRA is preferable if you expect that your tax rate will decrease when you retire, and a Roth will be better if you think your taxes will be higher in retirement. There is no income limit for a traditional IRA, but there is an income limit for a Roth IRA.\nIf you haven't yet entered the world of 401(k) plans and IRAs, they may be intimidating. In the beginning, remember the basics: Take advantage of your employer's plan if one is available, save as much as makes sense for your budget and future needs, and select your investments wisely. The tax benefits of using these vehicles will get you to where you want to go without overpaying Uncle Sam. END