401(k) vs. IRA vs. Roth: a plain-English comparison
Retirement accounts are just tax wrappers. Here's what each one does.
401(k)
Offered through an employer. Contributions come straight out of your paycheck, often pre-tax, and many employers match part of what you put in. The match is free money — take all of it before anything else.
Traditional IRA
You open it yourself. Contributions may be tax-deductible now, and you pay income tax on withdrawals in retirement.
Roth IRA / Roth 401(k)
You contribute money you've already paid tax on, and qualified withdrawals in retirement are tax-free. Generally better if you expect to be in a higher tax bracket later — which is common early in a career.
Simple sequence for most people
1) Contribute enough to get the full employer match. 2) Fund a Roth IRA if you're eligible. 3) Go back and increase the 401(k). Contribution limits change yearly — check the current IRS numbers.
Ready to try it on your own money?
SpeakCents tracks spending by voice, keeps budgets honest, and models retirement scenarios side by side.
Get started free