Individual Retirement Accounts—IRAs

The 401(k) plan represents one way of saving for retirement. It lets employees put aside money from their salary and receive matching contributions from their employers. But it’s not the only way to save.

Individual Retirement Accounts, or IRAs, are similar in many ways to 401(k) plans. They let people save on a tax-deferred basis and make withdrawals when they reach retirement. But they’re not tied to an employer. They give the participants much more control over the direction of their investments but carry lower contribution limits. And there are no matching contributions.