Michael Pollack
speaker
119 appearances
2 recordings
1 series
first heard Apr 2022
last heard Jun 2023
Michael Pollack’s voice in public audio — every appearance, attributed to the second.
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Appearances
WSJ Your Money Briefing · Why You Should Consider Having Both a 401(k) and an IRA · 6 Jun 2023
podcast
If you take the $22,500 that you contribute to the 401k and you add the $6,500 that you're contributing to an IRA, that's essentially almost 30% more per year.
So a 401 retirement account is an account offered through your employer.
The employer usually deducts money from each paycheck, and that money is invested in an account on your behalf.
The employer designs the account, determines what the investments are in the account,
And it's a fairly smooth process.
Most people don't even really pay a lot of attention to where the money is going in the 401k.
And as a result of it being so easy, it's a great way for people to save up money for eventual retirement.
An IRA or individual retirement account, on the other hand,
is an account that is not held necessarily through an employer.
Anyone can have an IRA.
You can have one even if you're not working.
And the IRA does not have a set menu of investments.
People have to decide on their own where the money in the IRA is going to be invested.
They have to choose the funds or the ETFs or whatever they want to put the IRA money into.
That's right.
There's no reason why you can't have both.
In the 401k plan, the IRS limits your annual employee contributions to $22,500 for people who are less than 50 years of age.
There's also a limit on how much you can put into an IRA in a year, and that's $6,500.
for someone who is under 50 years of age.
But if you only contribute to the 401 plan, you're obviously putting away less money than you would if you contributed to both.
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