401Ks And IRAs: What’s The Difference? - Orion Metal Exchange

WE WILL BEAT ANY COMPETITOR'S ADVERTISED PRICE - Call Now To Confirm Product Availability 1-800-559-0088


401Ks And IRAs: What’s The Difference?

The following article is created and or curated by the Orion Metal Exchange for the benefit of our followers.  We seek to provide relevant precious metals, economic and geopolitical content that can impact your retirement and savings. If you are interested in learning about precious metals investing, call 1-800-559-0088, for a FREE investor kit.  

Traditional 401k and IRA are some of the most commonly used retirement plans for people who are looking to invest their funds long-term for the future. Both accounts offer the benefit of sheltering your savings from tax deductions until you start withdrawing funds from them, which will then be taxed according to your normal income tax rate.

However, there are many differences between a 401k and an IRA. While 401k accounts are set up by your employers, IRAs are individual retirement accounts. Fund contributions to a 401k are made on a pre-tax basis while those to IRA accounts are made on a post-tax income basis.

Here are a few more differences between the two so that you can opt for the one best suited to your needs.

Deduction on Contributions

One good thing about traditional IRAs is that any person with earned income can make their contribution to the account, but not everyone can deduct contributions from their taxable income. Whereas, people who are active participants of an official 401k are able to make pre-tax contributions, regardless of what their income is. This lowers their taxable income.

The Limits of Contribution

The government imposes annual contribution limits to tax-favored savings accounts. This restricts the amount of money you can save away. 401ks are more at an advantage here as those under 50 can contribute up to $18,000 while those aged above 50 can contribute up to $6000, totaling it to $24,000. On the other hand, only contributions of $5,500 per year can be made to traditional IRAs for those who are aged less than 50; while those above 50 can contribute to $6,500 per year.

US dollars an egg in a nest

The Form of Investments

401ks can hold investments of stocks, bonds, dividends, Capital gains, Mutual Funds, and interest without incurring tax liability. IRAs can also hold stocks, bonds, real estate (in particular IRAs), mutual funds, capital gains, dividends, and interest in the account without incurring any tax liabilities.

The Tax Implications

Money that is deposited in 401k accounts will be tax-deferred and will continue to grow tax-free in the account. The gains made in the account will also not be taxed. Any distributions made from the account will be taken as ordinary income and will be subject to taxation accordingly. In IRAs, the contributions may be considered tax-deductible as subject to any income limits. The gains amassed in the account will not be taxed and any distributions will be considered as ordinary income and will be taxed accordingly.


Looking to open gold and silver IRA accounts online? Contact us at Orion Metal Exchange! We are a precious metals investment dealer dealing in gold and silver bullions and coins.

Your Order Summary

A minimum total purchase amount of $10,000.00 is required to checkout. Click here to shop more

Your Details Back
Your personal data will be used to process your order, support your experience throughout this website, and for other purposes described in our privacy policy.

Once you've placed the order, our team will contact you shortly.