<human>:  Can you please explain the differences between a 401k and an IRA?
<bot>: An IRA (Individual Retirement Account) is a type of retirement plan that allows an individual to save for retirement and reduce their taxable income. A 401k is a type of employer-sponsored retirement plan that allows employees to save for retirement and receive certain tax advantages. The contributions to both IRAs and 401ks are tax-deductible, meaning the money saved is not taxed in the year it is contributed. However, there are some significant differences between IRAs and 401ks. With an IRA, individuals are allowed to save up to $6,000 (or $7,000 if you’re 50 or older) every year, while 401ks allow contributions of up to $19,500 (or up to $26,000 if you’re 50 or older). Also, 401k plans typically offer different investment options, such as mutual funds, stocks, and bonds, whereas IRAs generally offer fewer investment choices. Additionally, with an IRA, there are no employer contribution restrictions, whereas 401ks are often offered with an employer contribution match. Lastly, IRAs have lower required minimum distributions (RMDs) starting age 70½, compared to 401ks which have to start at age 72.