While they have a lot of differents, 401k and IRA accounts offer a lot of similarities that make it easy to help understand what these accounts actually are. These are retirement savings accounts, basically. They?re a bit more than that though, really they are retirement investment accounts. See, your savings are invested in a variety of ways of your choosing (stocks, bonds, etc) and then you earn returns on these investments. This helps you offset inflation so that you can save enough to actually retire someday. They account options different in many ways in the details, but when it comes right down to it the concept is the same.
Source: http://www.acla-invest.com/small-business-news/whats-similar-in-a-401k-and-ira/
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