CBC Retirement
The Full Story
IRA Vs. 401(k)
So what is the difference between an IRA and a 401k? Quite a bit. Read below for information about an IRA and compare it to the information about a 401(k) (or 403(b)).
401(k) or 403(b)
-Employer and Employee contributions
-Maximum contribution of $23,500
-Additional $7,500 catchup over 50 years old
-Various matching or profit sharing options for employer contributions
-Applicable to Federal Tax Incentive
-No required matching
-Possible to have a vesting schedule on matching
-Allows for loans & hardship early withdrawals
IRA (SEP or Simple)
Simple IRA
-Employee and Employer Contributions
-$16,500 Maximum annual contribution
-$3,000 Catchup over 50 years old
-Requires 100% match on first 3% of employee contributions OR
-2% of All eligible employee compensation
-Immediate Vesting on employer contributions
SEP IRA
-Employer only contributions
-Equal contribution to all employees
-must fund up to 25% of eligible compensation
-Capped at $70,000 annually
-Immediate Vesting
