Question

Describe the difference between a 401(k) plan and an Individual Retirement Account.

Answer 1

401(k) is an employer-provided plan, IRA isn't.

Answer 2

The difference between a 401(k) plan and an individual retirement account is that almost anyone can open up an IRA, but only employees can enroll in 401(k) plans. The amount you can contribute to a 401(k) is larger than what you can contribute to an IRA. A 401(k) plan often has a feature called company match, where as an IRA does not.