401k advantages vrs IRA:
1) Full ERISA creditor protection
2) Ability to take penalty free distributions if separation from service occurred in or after the year employee turned 55.
3) Possible lower expense ratios than would be selected for the IRA investments. Emerging disclosure laws to give more clarity to actual expense ratios of these plans.
4) Potential for use of NUA benefits and growth of NUA at lower CG rates
5) Non spouse beneficiary could transfer to an inherited Roth IRA
6) Potential direct Roth conversions avoiding IRA pro rating with Form 8606
7) Better ability to transfer account to a new employer plan

IRA advantages:
1) Better range of investment choices including self directed options
2) Easier and quicker access to funds
3) More early withdrawal penalty exceptions including flexibility to take 72t distributions, which is rare with 401k accounts
4) Possible lower expense ratios (could go either way).
5) Broader beneficiary designation choices such as per stirpes, ability to name a non spouse without a signed waiver etc.
6) Ability to aggregate between IRA accounts for RMDs
7) Ability to take distributions without mandatory withholding
8) Temporary use of funds with 60 day rollover
9) Easier to handle the account if advisor is retained

There are probably more. But as you can see, some of these factors may be important to different people while being immaterial to others. Therefore, the client’s specific situation needs to be considered vrs these factors.

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