There are two types of retirement accounts that allow individuals to save for their future: The Individual Retirement Arrangement (IRA) that could be either traditional or Roth- and the 401(k) plan. The first one -IRA- is self-sponsored, this means that there is no need for employers to save for the future, and one can pick between a traditional or Roth IRAs depending on when one wants the income tax savings. On the contrary, the 401(k) is an employer-sponsored plan. This discussion aims to explain the differences between the two and describe which plan is better under different circumstances.
