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The Difference Between Annuities and 401(k) Plans
What is an annuity?
What is a 401(k) plan?
What are the differences?
- Availability: You can only invest in a 401(k) if your employer provides one, whereas annuities aren’t dependant on a company or business that you work for.
- Contribution Limits: You can only contribute an X amount toward your 401(k) every year. An annuity has no contribution limits.
- Tax Benefits: A 401(k) plan offers superior tax benefits than an annuity.
- Additional Surrender Fees: Annuity companies charge a fee when you withdraw or cancel your contract early regarding an annuity. You aren’t charged an extra fee from an investment company when you withdraw from a 401(k) plan.