401(k)'s vs. IRA's

What is the best account to use for your retirement savings, a 401(k) or an Individual Retirement Account (IRA)? Each has pro's and cons. With a 401(k) you can set aside more each year (up to $22,500 in 2023, or $30,000 if you're over age 50); it is easy for an individual to set up (usually your employer takes care of deducting your contributions from your paycheck each month and depositing them to the account); there are no income limits; and often employers offer matching contributions to boost your savings. IRA's are a bit more flexible than 401(k)'s (you can make contributions until the filing deadline [usually April 15]) whereas generally 401(k) contributions must be made by December 31; you can contribute any type of earned income to an IRA so you don't have to rely on your employer to offer the plan. However, you are responsible for setting aside and making your contributions; the max contribution to the plan is lower ($6,500 in 2023 or $7,500 if you're 50 or older); and there are income limits that apply if you or your spouse are also covered by an employer plan. There are also many other types of retirement plans to consider, such as SEP's and Simples. It's best to confer with your advisers to determine which plans are best for your circumstances.