Many details differentiate a 401(k) from an IRA. The main difference is that only an employer can sponsor a 401(k) while an IRA is available without sponsorship.

Another difference is the contribution limits. An IRA only allows for $6000/yr in contributions while a 401(k) allows for $20,500/yr (in 2022), depending on age. Employers are allowed to contribute matching funds AND profit-sharing funds in a 401(k), while these are not allowed in an IRA. And, 401(k) plans offer substantial tax benefits to employers, while IRAs do not.