Retirement Accounts

401(k), Roth 401(k), Traditional and Roth IRA, SEP, SIMPLE, HSA, 403(b) and 457(b) explained side by side, with contribution limits by tax year.

Retirement accounts are ordinary investment accounts with special tax rules. The government gives you a tax break for saving; in return, there are limits on how much you can put in each year and rules about when you can take money out.

The biggest difference between them is when you pay the tax.

The big idea

Traditional, Roth and HSA

Traditional

Tax break now, taxed later

Money goes in
Tax advantage: Before tax — lowers your taxable income now
While it grows
Tax advantage: No tax on growth each year
Money comes out
Taxed: Taxed as ordinary income

Roth

Taxed now, tax-free later

Money goes in
Taxed: After tax — no deduction now
While it grows
Tax advantage: No tax on growth each year
Money comes out
Tax advantage: Tax-free, if the rules are met

HSA

Potentially untaxed at every step

Money goes in
Tax advantage: Tax-deductible
While it grows
Tax advantage: No tax on growth each year
Money comes out
Tax advantage: Tax-free for qualified medical costs

Which is better depends largely on whether your tax rate is higher now or in retirement — something nobody knows for sure. Many people hold both kinds. For how this fits into the bigger picture of after-tax returns, see Tax Alpha.

Account by account

The nine accounts most people hear about

Start with the table, then pick an account below for the details. Rules below are simplified and have exceptions; the IRS and your plan documents have the final word.

Contribution limits for tax year

Figures checked against IRS publications on October 17, 2026. Limits usually change every year.

Retirement accounts at a glance, with 2026 contribution limits
Account	Typically for	Roth version?	Employer money?	2026 limit*
401(k)	Employees of companies that offer one	Often	Often a match	$24,500
Roth 401(k)	Employees whose plan offers a Roth option	Roth only	Often a match	$24,500
Traditional IRA	Anyone with earned income	No	None	$7,500
Roth IRA	Earners under the income limit	Roth only	None	$7,500
SEP IRA	Self-employed and small business owners	Sometimes	Employer only	25% of pay, up to $72,000
SIMPLE IRA	Employees of small businesses	Sometimes	Required	$17,000
HSA	People on an HSA-eligible health plan	N/A	Sometimes	$4,400 / $8,750
403(b)	Public school, hospital and nonprofit staff	Often	Sometimes	$24,500
457(b)	State and local government employees	Sometimes	Sometimes	$24,500

*Basic annual limit for the 2026 tax year, before catch-up contributions. Some limits are shared between accounts — open an account for details.

Pick an account

Workplace

401(k)

The most common workplace retirement plan

What it is: A retirement plan run by an employer. You choose a percentage of each paycheck to contribute, and it goes straight into investments you pick from the plan's menu.
Who typically uses it: Employees of private-sector companies that offer a plan. It is many people's main retirement account.
Traditional vs Roth: A standard 401(k) contribution is Traditional (pre-tax). Many plans also offer a Roth 401(k) option, and you can often split contributions between the two.
Tax treatment: Traditional contributions come out of your pay before income tax, lowering your taxable income now. The money grows tax-deferred, and withdrawals are taxed as ordinary income.
Employer contributions: Many employers add money, usually a match on what you put in (for example, 50% of your contributions up to 6% of pay) or a profit-sharing contribution. Employer money may vest over several years, so you could forfeit some if you leave early.
2026 contribution limit: Up to $24,500 of your own pay (Traditional and Roth combined).
Age 50 or older: up to $8,000 more as a catch-up contribution.
Ages 60–63: the catch-up rises to $11,250 instead, if the plan allows it.
If your wages from that employer were over $150,000 the year before, catch-up contributions must go in as Roth.
Your contributions plus your employer's can't exceed $72,000 (not counting catch-ups).
The employee limit is shared across every 401(k) and 403(b) you contribute to in the year.
Withdrawal considerations: Withdrawals before age 59½ usually owe income tax plus a 10% additional tax, unless an exception applies.
If you leave your job in or after the year you turn 55, you can generally take money from that employer's plan without the 10% additional tax.
Some plans allow loans or hardship withdrawals.
Required minimum distributions (RMDs) generally start at age 73, or 75 for people born in 1960 or later. Rules for people still working can differ.
Advantages: Much higher contribution limits than IRAs
Saving happens automatically through payroll
An employer match is extra money on top of your pay
Strong protection from creditors under federal law
Limitations: You can only choose from the plan's investment menu
Plan fees vary and can be high in some plans
Only available if your employer offers one
Money is hard to reach before 59½ without a cost