I’m from the uk: is a 401k the same as a pension?

Roth IRA is better

No it’s. It the same, a 401k is what many companies replaced their pensions with. It’s based in the stock market. You put in money every pay period and it is frequently matched, in some percentage, by your employer. You then hope that the stock market does well enough for you to have some savings for retirement. There are some companies that still have a pension that would last until death but most do not have that guaranteed income. The only thing we have similar to the UK pension is social security but that may not even exist in 30 years. We all pay into that from our paychecks as a mandatory deduction.

Both are retirement vehicles but different. A 401K is an account with investments (stocks, bonds, cash equivalents—and will be limited to what your employer offers within the plan). An employee can elect to put a certain amount of their paycheck into their 401K each pay period. A lot of employers “match” the contribution up to a certain amount too (example: if you contribute 10% of your paycheck, they might match you by contributing 5%…but if you contribute 0%, you don’t get their match). There are a lot more rules with them but essentially it’s for retirement and the IRS will penalize you for withdrawing the money before age 59.5 (with few exceptions)

There are a lot of different types of pensions so that is harder to answer. In the US, pensions are more common in the public sector (public school system, firefighters, etc.) Some private companies offer them as well but becoming less popular. They all have their own rules (work there for x amount of years to qualify, etc.) You don’t choose your own investments with the pension. It’s usually more focused on an income stream for retirement. Example- work here 20 years and we will pay you $3000 a month from age 65 until you die. Maybe options to continue payments to a spouse if you die first (usually at the cost of receiving less each month for your life), or maybe no option to protect spouse. Sometimes you have the option to take a “lump sum” and move your pension into a 401k when you leave an employer —It all just depends. There’s a whole separate set of rules and reporting that US pensions have to follow and the record keeping can be very cumbersome.

Okay it isn’t the same.. a 401k will be taxed, your money, company’s match and interest; all will be taxed. Uncle Sam wants his money.. a Roth IRA, is all yours.

That’s the difference

I’m speaking for America. Btw