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Mastering Trading Strategies: Diamond and Butterfly Patterns, FTMO Challenge, and Trading in the Zone Boost Your Trading Success with FTMO Challenge, Forex Funds Management, and Trading in the Zone Diamond Pattern, Butterfly Pattern, Bullish Harami and other technical analysis tools Experts Weigh In on Cryptocurrencies: Here’s What They Have to Say Comparing 401(k)s and IRAs: Which Is Right for You? Private Equity and Startup Investing Are We Experiencing the Dot-Com Bubble 2.0? Tumultuous Equities in 2022: Here’s What Experts Are Saying Market Uncertainty and the Current (Potentially) Recessionary Environment: Where Do We Head From Here? Cryptocurrency Investing Insights: The Importance of Diversification What is margin in Forex: Explaining the term in plain English Basic principles of a successful trading day Facebook's cryptocurrency project is on the brink of collapse Specifics of trading with the Keltner Channel indicator TOP recommendations for effective use of Parabolic SAR Bitcoin renews all-time high but prospects remain bleak Cryptocurrency, «Robinhood», SPAC: New investment hybrids of the Covid-19 era What is slippage in Forex and how to avoid it? What is the NFP in Forex (Non-Farm Payrolls)? BTC.TOP believes that bitcoin will reach $400,000 The best currency pairs to trade Most common mistakes in algorithmic trading Terms and conditions of employment with FTMO The coronavirus snaps an 11-year growth streak in financial markets Bitcoin may fall to $10,000, but it is too early to panic The founders of the Africrypt crypto exchange disappeared along with their users' bitcoins What is a Buy Limit order in Forex and how to use it? India may introduce a law banning cryptocurrency trading What is scalping in Forex: all the pros and cons Elon Musk's unexpected statement crashed the crypto market Who are market makers and market users? How to pass the FTMO Challenge? Japan has several reasons to issue a national cryptocurrency FTMO is the best Proprietary Trading company The Linear Regression indicator: advantages, characteristics, recommendations The FTMO Challenge: TOP 5 tips Huge electricity costs threaten the cryptocurrency industry Benefits of working for Proprietary Trading Having no trading plan is the biggest mistake of novice traders What is a sideways trend in Forex, and how to approach it? What is capital in Forex: the size and usage Successful traders always limit their losses The McClellan Oscillator: All a novice trader needs to know Top 10 tips for turning a loser into a successful trader Pros and cons of using TOP 3 volatility indicators Aspects of Forex trading at night Top 5 unforgivable intraday trading mistakes How to trade the Diamond formation About a margin in Forex in simple terms How to use the RSI indicator
Comparing 401(k)s and IRAs: Which Is Right for You?
Comparing 401(k)s and IRAs: Which Is Right for You?

Financial literacy is not often taught in academic curricula these days, leaving many confused about investment approaches, retirement savings, and more. With this in mind, this article will highlight the differences between 401(k)s and IRAstwo popular types of retirement savings accounts that have some key distinctions.

To begin, a 401(k) is a retirement savings plan offered by employers. Accordingly, employees can contribute a percentage of their salaries to the investment account. Contributions are typically matched by employers, albeit to a certain percentage. Notably, funds in a 401(k) can compound and grow entirely tax-free until withdrawn (i.e., generally during retirement), at which point they will be subject to income taxes. To contribute to a 401(k), one's company must offer the plan.

Unlike a 401(k), an IRA or "individual retirement accountis a retirement account not associated with ones employer. The two types of IRAs available are traditional IRAs and Roth IRAs, and there are important distinctions between the two. Specifically, contributions to a traditional IRA may be tax-deductible; however, funds are taxed when withdrawn. Meanwhile, Roth IRA contributions are not tax-deductible, but funds can be withdrawn tax-free in retirement. IRAs are available to anyone, regardless of whether their company offers a retirement plan, making them a wonderful option for many.

Yet another difference between 401(k)s and IRAs is what can be contributed annually (i.e., referring to limits associated with what can be added to each account). For 401(k)s, the maximum contribution is $20,500 in 2022 and will be $22,500 in 2023. There is also an additional contribution option of $6,500 for those 50 and over. For IRAs, the maximum contribution is $6,000 in 2022, with an additional contribution amount of $1,000 available for those 50 and over. Finally, because 401(k)s are offered by employers, they generally have access to more investment options, such as mutual funds and target-date funds. Meanwhile, IRAs are typically more limited with regard to investment opportunities.

Ultimately, both account types are valuable tools for retirement savings. Nevertheless, the one that is right for you will ultimately be dependent on your individual circumstances and goals. As a baseline, remember to consult a financial advisor before making critical financial decisions.

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