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I know there are a few different factors to this, such as if you've reached the contribution limit for the year on your 401(k). With a 401(k) you can get employer contribution matching and a higher contribution limit.

So other than reaching the contribution limit on your 401(k), when would you want to contribute to an IRA over a 401(k)? Does traditional versus Roth accounts make a difference?

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  • you have already deposited up to the employer match on the 401(k) and the IRA is more attractive. (Features listed in other bullet points)
  • the 401(k) does not offer the Roth version, and you prefer that as an option so you use Roth IRA
  • you already have $100K+ in the 401(k), so the loan option is already optimized (i.e. the $50K limit is available)
  • you like the strategy of converting to Roth with individual investments, but recharacterizing losers. This needs an IRA.
  • The 401(k) fees are high. After the match, it's just extra cost
  • The 401(k) investing options are not varied enough or to your liking. IRA has far more flexibility
  • (more to come)
  • How do you judge the "attractiveness" of an IRA or 401k? – Joe S Jun 28 '17 at 15:03
  • Could you please explain the optimization of the 401k loan option? – Joe S Jun 28 '17 at 15:04
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    The ability to borrow is limited to 50% of the 401(k) balance with a $50k borrowing cap. If I ignored the loan feature, some members would point out my oversight. – JoeTaxpayer Jun 28 '17 at 15:10

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