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Start Planning Your Retirement: An Overview of Retirement Accounts
Retirement planning can feel intimidating and overwhelming, leading many employees to delay contributions to their retirement plans. This ultimately results in them missing out on valuable tax savings and benefits. Just a few of these benefits include lower or deferred taxes, employer contribution matching, tax credits, and reduced student loan payments.
If your employer doesn’t offer a retirement plan, the good news is that you can still contribute to a retirement account by setting up an IRA or HSA.
Take a look at the different retirement account options that may be available to you!
| Retirement Account | About the Retirement Account | Contribution Limits (2024) | Tax Benefits | Withdrawal Info |
|---|---|---|---|---|
| Traditional 401(k) | An employer-sponsored retirement savings plan | $23,000
$30,500 if age 50 or older
$69,000 combined employee and employer contribution |
Pre-tax contributions reduce taxable income
Earnings are tax-deferred |
Penalty-free at age 59½
Mandatory withdrawals by age 73
Penalty-free hardship withdrawals and/or loans may be available |
| Roth 401(k) | An employer-sponsored plan allowing after-tax contributions | $23,000
$30,500 if age 50 or older
$69,000 combined employee and employer contribution |
Contributions are after-tax
Earnings grow tax-free |
Penalty-free at age 59½
Earnings are tax-free if held for at least 5 years
Penalty-free hardship withdrawals and/or loans may be available |
| Traditional IRA | An individual retirement account for personal savings | $6,500
$7,500 if age 50 or older |
Contributions may be tax-deductible
Earnings are tax-deferred |
Penalty-free at age 59½
Mandatory withdrawals by age 73
Penalty-free hardship withdrawals may be available |
| Roth IRA | An individual retirement account for after-tax savings | Up to $6,500
Up to $7,500 if age 50 or older |
Contributions are after-tax
Earnings grow tax-free |
Penalty-free contributions anytime
Earnings are tax-free if you’re at least 59½ and earnings were held for at least 5 years
Penalty-free hardship withdrawals may be available |
| Health Savings Account (HSA) | A tax-advantaged account for medical expenses
Account can be opened with an employer and/or by the employee |
$4,150 for individuals
$8,300 for families
Additional $1,000 catch-up if 55 or older
Limits include up to $1,000 in contributions from your employer |
Tax-deductible contributions
Grows tax-free
Funds can be invested |
Penalty-free anytime if used for medical expenses
After age 65, funds can be used for anything, and non-medical withdrawals are taxed as income |