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What exactly is a 401k?

Well, 401k, unlike an IRA, is a retirement plan but is sponsored by your employer and it's probably the most popular retirement plan in the country. And it allows you to defer part of your pay and put it into an invest account which you're controlling where it is invested at and it grows tax deferred. So there is a big tax advantage to do it that way.

So what is the difference if you decide to change employers? What happens to that 401k?

You really have about four options. One is if you have over $5000 you can leave it where it's at. Number two, you go to your new employer and they have a 401k and you can transfer it there. Number 3, you can transfer it to an IRA and the fourth way is you can cash it out. You don't want to do that because you will pay a lot of taxes.

Is there an advantage or disadvantage between having an IRA or 401k if you had to compare them?

The limitations are a lot higher than a 401k and it's a lot more convenient because it's coming out of your payroll. Kind of out sight out of mind. Opposed to an IRA you got do it yourself. It's coming out of you tax and you recognize the tax benefit every April instead of every week.