Retirement Accounts vs. Retirement Plans: How do they differ? On the surface, individual retirement accounts and qualified retirement plans are both trying to help you get to the same place, retirement security. While both retirement accounts and retirement plans are there to help you plan for the future, these two vehicles run remarkably differently. Retirement accounts are not the same as retirement plans, as they differ in tax treatment, investment options, and possible employer contributions. So how does a person choose?
While it is possible to contribute to both, you can’t do it with the same dollars. It’s important to understand your retirement savings options and consider their long-term implications. Think about your money in three groups: what you make, what you grow, and what you distribute. Saving money is vital to a happy retirement, and you want to make sure your retirement strategy will give you the results you desire. Here are the major differences between retirement accounts vs. retirement plans.