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Reader Question: IRA vs 401k

Have a question about money? Send it to me and you could be the next featured reader question. Check out this great one from Julia:

I recently paid off all my debt, now I’m looking to increase my investing beyond my company-sponsored, traditional 401K.

I understand the tax advantage of a Roth – I must’ve read it 50 times while researching this topic.

I don’t understand the difference between 401K and IRA. It looks like the biggest difference is options: 401K is more restricted in how I can invest, whereas IRA has a smaller contribution limit.

It seems like everybody recommends Roth IRA over Roth 401K and I don’t understand why.

Let me add this: I’ve had a traditional 401K for several years and I generally don’t pay any attention to it. I know what I’m contributing; I know that the growth rate has reasonably matched the market in general; and I occasionally get a notice that my allocations have changed, so I guess somebody is managing it. If I’m being perfectly honest, I will never have the interest or patience to learn about investing – my brain doesn’t work that way (seriously, I think I could learn brain surgery faster than I could learn investing). And for that, the idea of picking my own investments intimidates the hell out of me. And if I’m not bothering to pick my own investments, than what difference does it make in how many funds there are to choose from?

So, what exactly is the advantage of an IRA (compared to 401K)?