Do I need an IRA if I have a 401(k)?

Posted on February 17, 2023 at 8:00 AM by First State Bank

Contributing to both a 401(k) and an Individual Retirement Account (IRA) offers immense benefits: While 401(k)s often include a match from your employer, IRAs give you the flexibility to choose the investment firm you wish to work with.

With all the different types of accounts you have to pick from, what's the right choice when it comes to retirement accounts? In many cases, you don't need to choose one over the other – we see value in exploring if an IRA may be right for you even if you already contribute to a 401(k).

While 401(k)s and IRAs help you save for retirement in a tax-advantaged manner, they differ in important ways.

The differences between an IRA and a 401(k)


401(k)s are employer-sponsored retirement plans that are part of an employee's benefits package. Many employers will match your 401(k) contributions up to a certain percentage or dollar amount. In most cases, your 401(K) is held at an investment firm of your employer's choice and may have certain investment options.


Based on your situation, you can determine whether to continue adding money to your 401(k) and/or open an IRA. You can open an IRA at most banks and investment firms. These accounts are not tied to your employer and are transferable between institutions. Though there are some limitations to be aware of, most people can fund an IRA.

IRAs may also allow you more flexibility in your investment choices, since you're able to choose the firm you invest with as well as the types of investments that make sense for you. 

Let us help you save for retirement 

With so many different ways to save for retirement, it can be difficult to figure out which ones make the most sense for you. First State Bank can help break down your options and help you decide which ones fit your specific situation and goals. Contact a Personal Banker today!