Key Takeaways
- Open enrollment often coincides with the window when many employers allow you to change your 401(k) contribution rate, making it a natural time to review your retirement strategy.
- If your employer offers a 401(k) match, contributing enough to capture it in full can be worth prioritizing before funding an IRA.
- An IRA typically offers a wider range of investment choices and account types than many workplace 401(k) plans.
- In 2026, you can contribute up to $24,500 to a 401(k) and up to $7,500 to an IRA, with higher limits available once you turn 50.
- Many savers benefit from using both accounts, contributing enough to a 401(k) to get the match and directing extra savings to an IRA for more flexibility.
Open enrollment usually gets people thinking about health coverage and not much else. It's worth using the moment to look at your retirement savings too. Should you lean on your workplace 401(k), open an IRA, or split contributions between both? The right answer can depend on your employer match, your investment goals, and whether you're carrying old accounts from previous jobs.
Does Open Enrollment Affect Your 401(k)?
Open enrollment typically happens in the fall, when employees review health coverage, dental and vision plans, and retirement benefits for the year ahead. Many employers also use this period to allow employees to adjust their 401(k) contribution rates.
Unlike health benefits, 401(k) contributions can typically be adjusted throughout the year rather than being locked in until the next enrollment period. Even so, open enrollment can still serve as a useful checkpoint before year-end to see whether a contribution rate lines up with a saver's plans and goals.
An IRA isn't tied to an employer's calendar at all. It can be opened and contributed to anytime, up until the tax filing deadline for that tax year. That flexibility is part of why open enrollment is a natural moment to consider whether a 401(k) alone is meeting a saver's goals, or whether an IRA might complement it.
401(k) vs. IRA: What's the Difference?
A 401(k) is a workplace retirement plan funded through payroll deductions, while an IRA is an account opened independently through a bank, brokerage, or provider. Both can offer tax-deferred or tax-free growth, depending on the account version chosen. From there, the two accounts start to look quite different.
Eligibility and Investment Choices
A 401(k) is only available through an employer that offers one, and the investment menu can be limited to whatever funds the plan provides. An IRA is available to anyone with earned income and can offer a broader lineup of stocks, bonds, ETFs, and mutual funds.
Account Types
Most 401(k) plans offer a traditional option and sometimes a Roth 401(k). IRAs come in additional varieties, including Traditional, Roth, and SEP for the self-employed, which allows for closer matching of the account to an individual's tax situation.
Contribution limits are another key difference between the two, and they're set separately for each account type.
