When it comes to saving for retirement, you have several choices as to where to park your cash. Two of the most popular choices are the 401(k) and the individual retirement account (IRA).

If you work for a company that offers a 401(k), you may already be enrolled in this type of retirement account. IRAs, on the other hand, aren't tied to your employer, so to open this account you'll just need to find a brokerage. Although each type of retirement account has its perks, there are a few reasons why you might choose a Roth IRA over a 401(k).

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When you invest in a 401(k) or traditional IRA, your savings are tax-deferred. That means your initial contributions won't be taxed, but you will need to pay income taxes on your withdrawals in retirement.

A Roth IRA is the opposite: You'll pay taxes when you make the initial contributions, but then your distributions are tax-free. This can be an advantage in retirement because you won't need to worry about taxes affecting your disposable income. And when you don't need to account for taxes in your spending plan, it can be easier to determine how long your savings will last.

Not only can a Roth IRA save you money on income taxes during retirement, but it can also reduce the amount you pay in Social Security taxes.

Approximately half of seniors pay taxes on their benefits in retirement, according to a report from the Senior Citizens League. How much you pay in taxes, however, will depend on your "provisional income." This is half your annual benefit amount plus your adjusted gross income.

If your provisional income is higher than $25,000 per year (or $32,000 per year for married couples filing jointly), you'll owe taxes on up to 85% of your benefit amount.

However, withdrawals from your Roth IRA do not count toward your provisional income. That means you can spend more in retirement without exceeding Social Security's income limit, which will reduce the amount you pay in taxes on your benefits.

With a 401(k), your investment options are limited. You typically only have access to a selection of mutual funds chosen by the plan administrator, some of which may charge higher-than-average fees. But because your 401(k) is controlled through your employer, your only options are to invest in the options available or forego contributing to a 401(k).

IRAs offer a wide variety of investments to choose from. Between stocks, bonds, ETFs, index funds, and mutual funds, you can select the type of investment that best fits your needs. Investing in a Roth IRA can be a smart move for those who want to take a more hands-on approach to investing, because you can create a more personalized portfolio than you could with a 401(k).

All this isn't to say that 401(k)s never have their place in your investment strategy. While Roth IRAs do boast several key benefits, the 401(k) does have its merits as well.

For one, many 401(k)s offer matching contributions from your employer. Matching contributions are basically free cash that you can collect just by saving in your 401(k), and they're a perk you won't find with an IRA. If you have access to employer matching contributions, it may be wise to invest enough in your 401(k) to earn the full match. Then you can invest the rest of your savings in a Roth IRA.

In addition, you're allowed to save more per year in a 401(k) than in a Roth IRA. For 2021, you can contribute up to $19,500 per year in a 401(k) and $6,000 per year in an IRA. For those over age 50, you can contribute $6,500 per year in your 401(k) and $1,000 per year in your IRA. If you're a super saver, you might choose to max out your Roth IRA first and then stash the rest of your savings in a 401(k).

While each retirement account has its advantages and disadvantages, the Roth IRA outshines the 401(k) in a few areas. By investing strategically and choosing the right account for you, it will be easier to build a healthy nest egg by retirement age.

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3 Reasons a Roth IRA Is Better Than a 401(k) - The Motley Fool