Finding enough money to save for retirement is hard enough. Figuring out which account to save in, especially when they all sound so similar, can make the process even more challenging. So if you're contemplating whether to contribute to your workplace Roth 401(k) versus a Roth IRA, or if you're just curious about how these two Roth accounts work, read on so you can make informed decisions about your retirement savings -- because where you save can be just as important as how much you save.

"Tax free" written on chalkboard

Image source: Getty Images.

Let's begin with how a Roth IRA and a Roth 401(k) are alike. Contributions made to both types of accounts are made with after-tax dollars. The money within the account then has the opportunity to grow tax-deferred, and eventually withdrawals are tax-free -- assuming all other guidelines are followed.

After that, however, there are some vast differences between these two accounts.

1. Contribution limits

The 401(k) allows larger annual contributions than other tax-advantaged retirement accounts. For 2017, you can save $18,000 in a Roth 401(k) plan, or $24,000 if you're aged 50 or older.

Compare that with the 2017 contribution limits for the Roth IRA, which are $5,500 for those under 50 and $6,500 for those 50 or older.

2. Income restrictions

In general, in order to contribute to a tax-favored retirement account, you must have earned income. But that isn't always the only requirement you have to meet.

For example, the IRS imposes income limits on who can contribute directly to a Roth IRA. For 2017, a single tax-filer who makes $118,000 or less can contribute up to the full amount allowed, but they are prohibited from contributing to a Roth IRA if they make $133,000 or more. For married couples filing a joint tax return, both spouses can contribute the maximum allowable amount to a Roth IRA if they earn below $186,000 collectively, but they're prohibited from directly contributing if they make $196,000 or more. Anyone who falls between the lower and upper income thresholds can contribute a reduced amount.

Meanwhile, anyone with access to an employer-sponsored Roth 401(k) is allowed to make contributions, regardless of their income. In fact, a Roth 401(k) may be the only way a high-income earner can directly access a Roth, so it's worth knowing about, as diversifying assets among accounts with different tax treatments can be beneficial for retirement planning.

3. Distribution requirements

In general, when you reach 70-1/2, you will need to begin required minimum distributions from all of your retirement accounts, including from a Roth 401(k). However, one of the most significant differences between the Roth IRA and the Roth 401(k) -- and possibly between all other retirement accounts and the Roth IRA -- is that you can, under current law, leave your money in a Roth IRA for your entire life and never be required to take distributions from it.

Additionally, because you are required to start drawing down most other retirement accounts, after age 70-1/2, you are no longer able to add money to those accounts. However, as long as you're still earning income, you can continue contributing to a Roth IRA even after age 70-1/2. This can, of course, lead to a considerably larger account balance.

Overall, while both the Roth 401(k) and the Roth IRA can help you diversify your savings by providing tax-free income in retirement, they each have their own distinct pros and cons, making them very different accounts.