So you’re planning for retirement and feeling unsure about which product is the best vehicle to get you there. These days, few people have access to “defined benefit” plans like the pensions that may have guaranteed your grandparents a certain payout from retirement through the rest of their lives. Instead, most retirement plans are of the “defined contribution” variety, meaning you (and maybe your employer) contribute a certain amount each month, quarter, or year, but the payout you’ll receive during retirement will be based on the market value of the account.

IRAs and 401(k)s are among the most common defined contribution plans, and both offer tax-advantaged retirement savings. However, there are a few key differences between these types of plans. The good news is that you don’t have to choose one over the other. If you’re for retirement, it’s quite likely that your plan may include both a well-funded IRA and a 401(k). But it’s a good idea to be informed about the differences so you can make smart choices for your future.

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