9 Types of Retirement Accounts

February 19, 2026

For many people, retirement feels distant—almost abstract—and the terminology surrounding it can sound like a foreign language. Acronyms such as 401(k), 457(b), and IRA are often mentioned without much explanation, which can make the entire topic feel overwhelming. In reality, these terms simply describe different types of accounts designed to help you save and invest for the future.

This overview breaks down the most common retirement plans, explains how they work, and highlights when each might be useful—whether retirement is decades away or closer than you think.

Common Retirement Accounts Explained

401(k) Plans

The 401(k) is one of the most widely used retirement savings tools in the U.S. Roughly 70 million Americans—about 43% of the workforce—participate in one through their employer.

With a 401(k), you elect to have a portion of your paycheck automatically deposited into a retirement account. Those contributions are typically invested in options offered by the plan, such as mutual funds or exchange-traded funds (ETFs). Many employers also provide a matching contribution, often up to a percentage of your salary, which can significantly boost long-term savings.

Most traditional 401(k) contributions are made with pre-tax dollars, meaning the amount you contribute reduces your taxable income for the year. For 2026, the standard contribution limit is $24,500. Individuals ages 50–59 and 64 or older may contribute an additional $8,000, while those ages 60–63 may be eligible for a higher “super” catch-up contribution of up to $11,250, depending on plan rules. You must choose one catch-up option—both cannot be used in the same year.

Beginning in 2026, workers with prior-year wages of $150,000 or more (indexed for inflation) must make catch-up contributions to a Roth source if the plan allows. If no Roth option is available, catch-up contributions may not be permitted.

Withdrawals taken after age 59½ are taxed as ordinary income but are not subject to penalties. Distributions taken earlier may trigger both income taxes and a 10% early withdrawal penalty. Starting early gives your savings more time to benefit from compounding.

403(b) and 457(b) Plans

Employees of nonprofit organizations, schools, and certain government agencies often have access to 403(b) plans. These operate much like 401(k)s, with payroll contributions typically made on a pre-tax basis.

Some public-sector and nonprofit employers also offer 457(b) plans. While similar in structure, 457(b)s have a notable distinction: once you separate from the employer offering the plan, you may withdraw funds without the early withdrawal penalty, regardless of age—provided the assets originated in the 457(b). Funds rolled into a 457(b) from a 401(k) or 403(b) remain subject to their original penalty rules if withdrawn before age 59½.

Pension Plans

Pensions—often called defined benefit plans—are less common today than they were decades ago, but they still exist in some industries and unionized workplaces. Unlike individual retirement accounts, pensions are funded and managed by employers.

Over time, employers contribute to a pooled investment fund on behalf of employees. In retirement, participants receive a predetermined benefit, usually paid monthly or as a lump sum. Because the payout is guaranteed based on a formula, pensions can help protect against longevity risk—the possibility of outliving your savings.

While pensions offer limited control over investment decisions, they can provide dependable income throughout retirement. Many are also insured (within limits) by the Pension Benefit Guaranty Corporation (PBGC).

Traditional IRAs

A traditional individual retirement account (IRA) allows you to save independently, without an employer-sponsored plan. Contributions are subject to annual limits and must not exceed your earned income for the year.

For 2025, contribution limits are $7,000 for those under age 50 and $8,000 for those 50 and older. In 2026, limits increase to $7,500 and $8,600, respectively.

Depending on your income and whether you or your spouse are covered by a workplace retirement plan, some or all of your contribution may be tax-deductible. Income thresholds determine whether deductions are fully allowed, partially phased out, or unavailable.

Money inside a traditional IRA grows tax-deferred. Withdrawals in retirement are taxed as ordinary income, and early distributions before age 59½ may be subject to penalties.

Roth IRAs

Roth IRAs are funded with after-tax dollars, so contributions do not reduce current taxable income. The trade-off is that qualified withdrawals—including investment growth—can be taken tax-free in retirement if IRS requirements are met.

As with traditional IRAs, withdrawing earnings before age 59½ or before the account has been open for at least five years may result in taxes or penalties. Contribution eligibility is subject to income limits, which increase periodically.

Roth IRAs can be especially appealing for savers who expect to be in a higher tax bracket later in life or who value tax-free income flexibility in retirement.

Rollover IRAs

When you leave an employer, you typically have several options for your workplace retirement plan: leave it where it is, move it to a new employer’s plan, or roll it into an IRA.

A rollover IRA allows you to transfer retirement assets while preserving their tax-deferred status. These accounts often provide broader investment choices and can simplify your financial life by consolidating multiple old plans into one. Before initiating a rollover, it’s important to compare fees, features, and investment options across all available choices.

Roth 401(k)s

Many employers now offer Roth 401(k) options alongside traditional 401(k)s. Contributions are made after taxes, but qualified withdrawals in retirement are tax-free.

Unlike Roth IRAs, Roth 401(k)s have no income limits for participation. However, the combined total of Roth and traditional 401(k) contributions must stay within annual IRS limits. Roth 401(k)s also require compliance with the five-year rule before tax-free withdrawals are allowed.

This option can be particularly beneficial for workers early in their careers who expect future earnings—and tax rates—to rise.

Health Savings Accounts (HSAs)

Health care expenses are often one of the largest costs retirees face. According to Fidelity’s 2025 estimates, a 65-year-old individual may need approximately $172,500 in after-tax savings to cover medical expenses in retirement.

An HSA can be a powerful planning tool if you’re enrolled in a qualifying high-deductible health plan. Contributions can be made with pre-tax dollars, invested for growth, and withdrawn tax-free for qualified medical expenses.

Funds used for non-medical purposes may incur income taxes and a 20% penalty, though the penalty disappears after age 65. Unlike flexible spending accounts, HSA balances belong to you permanently and can be carried forward year after year.

Bringing It All Together

Preparing for retirement isn’t about memorizing every rule or navigating the process alone. It’s about understanding your options, choosing the right mix of accounts, and developing a consistent strategy over time.

With the right guidance and a clear plan, retirement savings can feel less intimidating and far more achievable. If you’d like help building a strategy that aligns with your goals, working with a financial professional can provide clarity and confidence at every stage of the journey.

Sources:

https://www.fidelity.com/learning-center/smart-money/retirement-accounts

Disclosure:

This information is an overview and should not be considered as specific guidance or recommendations for any individual or business.

This material is provided as a courtesy and for educational purposes only.

These are the views of the author, not the named Representative or Advisory Services Network, LLC, and should not be construed as investment advice. Neither the named Representative nor Advisory Services Network, LLC gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.