401(k)s and IRAs are actually quite similar. They're both retirement accounts that offer attractive tax benefits to help you save up for retirement.
The main differences between 401(k)s and IRAs are contribution limits and flexibility.
401(k)s have higher contribution limits than IRAs. In 2019, those under 50 can contribute up to $19,000 annually to a 401(k), compared to just $6,000 for IRAs.
However, the downside is that 401(k)s often have a much more limited array of options to choose from compared to IRAs.
While you can invest in pretty much anything inside an IRA - from a single stock, to a managed hedged portfolio like Titan - 401(k)s generally force you to choose from a small selection of options offered by your employer.
That's because 401(k)s, unlike IRAs, must be sponsored and set up by your employer. As such, you'll only be able to invest in the investment products that your employer's 401(k) administrator offers - which often leave much to be desired.
The Best of Both Worlds?
There's a silver lining here though, because the funds you contribute to your 401(k) don't necessarily need to stay there.
By performing what's known as a "401(k) rollover," you can actually convert your 401(k) into an IRA all at once - and it doesn't count towards your annual $6,000 IRA contribution limit.
This is a great way to size up your IRA, transition your 401(k) into Titan's Flagship and Opportunities strategies, and bypass the $6,000 annual IRA contribution limit. And it's tax-free!
We understand the power of this, so we made 401(k) rollovers super simple at Titan - no paperwork, no fuss.
Just head to the app and open a new retirement account. All it takes is a few taps and you'll be well on your way to super-charging your IRA.
For more details on 401(k) rollovers, head here.