What is the difference between a 401(k) and an IRA?

You can, and probably will, end up having multiple retirement accounts, but there are many benefits to maximizing your 401(k) contributions. The biggest difference between the two is contribution limits: for 2024, an individual can contribute up to $23,000 to their 401(k) account ($30,500 if they are 50 or older), whereas the contribution limit on IRAs is $7,000. If your employer matches your employee deferral contributions, this increases the amount that you are able to save for retirement each year via 401(k).

Generally speaking, you can have both a 401(k) and an IRA.