what is the difference between 403k and IRA?

Answer 1

There is no 403k. There are 401(k) plans and 403(b) plans. A 403(b) plan is a retirement plan for University, civil government, and not-for-profit employees. It has the same characteristics and benefits of a 401(k). The names refer to the section of the tax code that describes them. 401(k) plans are available at for-profit companies. They are both pension plans funded by either the employer or the employee (or both). The maximum funding limits are identical, as is the penalties for early withdrawal.

They are a bit different from an IRA. An IRA is totally separate from your employer. It is a self-funded retirement plan (Individual Retirement Account). The money going into an IRA can be deducted from your taxes or not depending on various factors too numerous to mention here. There are Traditional IRAs that are typically deducted from your taxable income in the year of contribution, but taxed upon withdrawal and Roth IRAs which are not deductible at contribution and not taxable upon withdrawal (assuming you wait until you are eligible to withdraw the money). A 401/403 can be either pre-tax or post-tax depending on the employee's preference. It is a rare set of circumstances where post-tax contributions are ultimately more beneficial.

So, there are lots of similarities and lots of differences. Here are some links to explain more...