What are the differences between investing in a Roth IRA vs. 401(k)?
The first significant difference between investing in a Roth IRA versus a 401(k) plan is how you go about making contributions. With a Roth IRA, the onus is on you to open the account (usually at a popular online brokerage company's website) and then fund it.
Early Withdrawal Rules
Here is a situation where a Roth IRA beats out the Roth 401(k): early withdrawals. Usually, pulling money out of your retirement comes with a penalty. That is not always the case with a Roth IRA since you can withdraw contributions at any time.
Roth IRAs Offer Withdrawal Flexibility vs. A Roth 401(k)
A Roth IRA differs from a Roth 401(k) in that contributions made to a Roth IRA can be withdrawn tax-free and penalty-free at any time. Inside a Roth 401(k), the plan participant faces a 10% early withdrawal penalty on withdrawals made before age 59½.