Job satisfaction is about more than simply cashing a paycheck, which is why employers are offering customized benefit plans to employees to keep them happy and productive. This helps make sure benefit basics like retirement and health care plans are competitive.

Yet even the most basic of employee benefits are confusing sometimes. It’s up to employers to help employees understand their benefit options. Retirement benefits, for example, come in several types. Two common ones are Roth IRA and 401(k) plans. So what is the difference between these two?

Take a look at the main reasons employees may want to sign up for either a Roth IRA or a 401(k) and how to break down both for them.

401(k) Plans

Retirement 401(k) plans are the standard option provided by most employers because employers can

contribute to them. The amount that companies contribute varies; and of course, the higher the company match, the more attractive to potential employees. Pension plans are declining in use, but employees feel that their employers care when they make fund-matching available to retirement savings.

With 401(k) plans, employees can contribute funds before taxes are taken out of earnings. The gains from employer matches and other earnings are not taxed either. Employees are taxed on the withdrawals that they take out after retirement age. Withdrawals normally include both the original money contributed and any earnings on that money. At age 59.5, they can begin withdrawing from their 401(k) plans without facing a 10% penalty. At age 70.5, employees are required to start taking withdrawals.

As of 2016, the maximum yearly employee contribution is $18,000 for employees under 50 and $24,000 for employees 50 and over. The maximum total contribution (employee and employer combined) cannot exceed $53,000 or 100% of the employee’s salary.

Roth IRA Plans

The first thing to note about Roth IRA plans is that not everyone qualifies to contribute. Currently, the

Internal Revenue Service does not allow single people who make more than $132,000 per year or married couples filing taxes jointly who make more than $194,000 per year to contribute to a Roth IRA. The contribution limit declines as income rises between $184,000 and $194,000 for couples filing jointly. For single filers, that range is $117,000 to $132,000. If your income level is below those amounts, you can contribute fully to a Roth IRA: the limit is $5,500 per year or $6,500 if you are 50 or older.

One of the biggest benefits of a Roth IRA is that distributions are never required of you. Those who do not need the money do not need to withdraw it. If the money is never withdrawn, it can go to spouses or children or another destination. In addition, money is taxed in the year it is contributed to the Roth IRA, as opposed to when it is withdrawn. This means that contributions – and also earnings – can be taken out tax-free at retirement age. Note, however, that those who do decide to take withdrawals must be at least 59.5 years old and have held the account for at least five years.

From an employee benefits perspective, Roth IRA plans are not as attractive as 401(k) plans. Employers can help their workers set up Roth IRA accounts for deduction purposes, but companies cannot match employee contributions. This is different from SIMPLE IRAs and SEP-IRAs, which do allow matching. Providing employees with easy ways to save for retirement is a nice perk, but certainly not as attractive as matching funds.

Making the Decision

Employees will need to consider their ultimate retirement saving goals before picking a retirement plan.

The clear advantages of a 401(k) plan over an IRA are that employers can match funds and employees can contribute more money. At companies where there is no employer match, however, employees may consider sticking with the Roth IRA. There’s also the option to contribute to both. Just be sure to inform your employees of the rules and restrictions that go along with these types of investments.

Employers who want to give their employees even more financial guidance when it comes to retirement savings should consider offering financial fitness education as an added benefit. This additional support can make a big difference in how employees perceive their job, their quality of life, and their future.