Ask ten people the difference between a 401(k) and an IRA. You will get ten answers. Nine of them will be wrong in the same way.
They will describe the investments.
"A 401(k) is mutual funds." "An IRA is stocks." "One is safer."
All wrong. Both accounts can hold the exact same index fund. Same ticker. Same fund. Same performance.
So what actually separates them?
Not what is inside. The box.
A 401(k) and an IRA are legal wrappers. They are sets of rules about who can put money in, how much, when it comes out, who else can contribute, and what happens when you quit.
Change the wrapper and you change everything. You change how much you can save. Whether your employer chips in. Whether you can borrow. Whether you can touch the money at 56 without a penalty.
The investment inside is often identical.
That is the whole idea, and almost nobody explains it that way.
Let's fix it.