We performed electronic structure calculations within density functional theory including ab initio molecular dynamic simulations of isolated Fe13 and Fe55 clusters. We observed the energy preference of icosahedral clusters over cuboctahedrons for both Fe13 and Fe55. The magnetic structure is ferromagnetic for Fe13, but anti-ferromagnetic for Fe55. But isolated clusters exhibit a HOMO-LUMO gap.Subsequently, we embedded the clusters into models of silica glass of different size. For embedded clusters we observed the formation of an iron oxide interface between cluster and dielectric matrix. Though many different models were computed, they show a very homogeneous trend. The magnetization of optimized embedded models is close or larger than the magnetization of free clusters. The small clusters retain their electronic structure around the Fermi-level despite some major distortions.