Hello guys, what is the difference between simple IRA plan and 401k plan that companies usually offer for its employee.  any insight will be appreciated. 

i also have a question regarding 401K plan. If we quit job in US and go outside US not to return back, will we get that money back in that case? Or we will have to wait till we are 65?

IRA is same as 401k, only that 401k is employment based retirement account, while IRA could be opened in any financial institution. To answer your question regarding being able to take money our. Yes you could take the money out but if you do, there's a hefty fine, could be about 35- 45% in tax as a penalty imposed if you take money out. But you could take it out.

Individual Retirement Annuity is after tax and  you can buy from any financial instituions, and 401k is employment based retirement plan, if you get 50 or 100% match from employer on your contribution, just get it. this is win-win situation.

Individual Retirement Annuity is after tax and  you can buy from any financial instituions, and 401k is employment based retirement plan, if you get 50 or 100% match from employer on your contribution, just get it. this is win-win situation.

i am still not clear about employment based retirement plan.   my company is matching 3% max of my annual  salary in my IRA plan.  so, what is the difference if a company matches same 3% in 401 k plan. 

Silendra, step in and advise here, he is the tax man and providing free services.

anyone....

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I don't know that company matching on IRA.
But in case of 401k, if your salary is $50000 @ 3%( 100% matching) is $1500.
If you put $1500 a year, your company will add $1500 more. So at the end of the year your 401K saving is $3000

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a company sponsored 401k definitely has an advantage if you plan to be in the US for a long long time. you can set aside up to $15,500 pretax annually  from your salary and many companies match 3% - 6% of the first 50% of your annual salary. you can take all this money and invest in various markets, depending on your company's portfolio options. IRA is short for "individual retirement account" and you may contribute $5000 annually. there's more details at www.ira.com.

all the details can't be covered in these threads. i suggest you to visit this site for more information: www.investopedia.com.

himalayandude, well though my company has simple IRA plan for its employees, they match maximum of 3% of salary.  i just wanted to know what other differences that IRA and 401k plan have.  i know some companies matches more than 3%, that is not my curiosity.  i was wondering if there are other benefits other than matching %.  thanks

does anyone know about company matching on IRA? i've never heard about it. i thought it was for 401k or 403(b) or something like that. i thought IRA was something you opened personally and could get a deduction in your tax return (provided the criteria was met).

midwestdude, actually in our company its like that.  my company is doing this for its employee.  you are right that the amount in this plan is exempted from tax.    actually someguy from northwestern mutual fund came to our office and was saying its a smaller version of 401 k plan.  i am not sure what does that mean...and  i am not sure what other differences are there ...

401 k  definitely has advantage than IRA. Max amount that you can contribute on IRA for 2008 is $5000.
Check this wikipedia link, it might help you

thanks for the link himalayandude.  it does mention that IRA is contributed by employee only.  however, in our case its different.  well, 5000 is a lot of money if i deduct 3% of my salary, so thats not a problem i guess.  i dont earn that kind of money at this time.  thanks again.

IRA is same as 401k, only that 401k is employment based retirement account, while IRA could be opened in any financial institution 401 k definitely has advantage than IRA