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Originally Posted by Buehler445
If it is a traditional IRA, there isn't a lot of difference structurally. However, 401k contributions are made Pre-tax. This is a giant deal. Essentially, any money you put in a 401k reduces your taxable income. If you look at your paystub, it essentially, gross pay - 401 contributions = net taxable then they calculate withholdings.
Now, you can essentially do the same thing with a IRA, but it is done after the fact on your tax return and it is limited at $5,000. 401k limits are $14,000.
I'd keep it in the 401k unless you are hitting your limits.
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The 401k is designed for you to contribute a set portion of your pay, often with the employer matching a certain percentage. The IRA is for you to contribute above and beyond that, which you could alternatively do through your 401k, just not being matched for the above and beyond contributions.
major differences between the IRA and the 401k will probably be fee structure and fund offerings. Occasionally, an employer will also match a portion of IRA contributions, like a 1 to 2 ratio up to a certain amount.
As a rule of thumb, you should take advantage of however much your employer is willing to match.
Another thing you may want to look into is a Roth 401k. While the portion of the 401k that your employer matches is required to be pretax by law, the portion that you contribute is eligible to be after tax. By paying taxes on your contribution now, rather than on the compounded sum at retirement, you may be able to save 10s of thousands in retirement.
Talk to your tax advisor to see if this is a good strategy for you.