401k IRA differences are not great, but they will affect the decision you make as to which one to use. It is possible to have one of each but there may be certain restrictions, so it is best to check with a financial advisor about your options. Most people will usually have one or the other, depending on their work situation. 401k accounts are setup through your employer, so your choices will be limited to whatever the company you work for offers. An Investment Retirement Account (IRA) is a personal account that allows you to save money for your retirement, regardless of your work situation.
The main differences have to do with the responsibility of setting up the accounts. With a 401k investment the funds are setup by the employer; with an IRA it is the account owner's responsibility to make sure that investments are done and that they are done properly. A 401k has the advantage of possibly receiving matching 401k contributions from the employer, either a portion or in some cases 100 percent of what you contribute. With an IRA, it is completely up to the owner to fund the account.
The other significant difference has to do with limits. Limits can be somewhat confusing depending on the different types of plans out there, and on the age of the contributor. Generally speaking, a 401k retirement plan will allow those less than 50 years of age to contribute $16500 a year, and those 50 and over to contribute a maximum of $22000. IRA limits are significantly lower; $5000 a year for those under 50, and $6000 per year for those 50 and over.
401k IRA benefits seem to weigh heavily on the side of 401k accounts, but there are advantages to having an IRA. The main benefit is the ability to have greater control over where your money is invested. A 401k can be difficult to change around, and there are greater restrictions on how the money can be invested. An IRA on the other hand can give you an almost unlimited range of investment options.
401k IRA discussions tend to come down to work situations and investment preferences. Those who have a stable working situation with an employer who makes reasonable contributions to their accounts are probably better off with their 401k plans, especially considering the differences in contribution limits. That being said, there are certainly enough reasons to have an IRA instead or in addition to a 401k investing plan.