Is it better to have a 401K or IRA?

You don’t have to choose one or the other: even if you have a 401(k) plan through work, you may be able to put extra money aside in an IRA. However, with an IRA all the funds invested in the account come out of your pocket. 401(k) plans are sponsored by employers, and many companies try to encourage employee participation with “matching contributions”: they put in a dollar for every dollar the employee puts in up to a certain threshold (e.g., up to 3% of the employee’s salary). If your company offers matching contributions, you should take maximum advantage of that before putting your money into an IRA – otherwise, you’re leaving money on the table.