Basic employee elective-deferral limit. Catch-up limits may apply by age.
Know what each account is for
A 401(k), IRA, Roth IRA, HSA, and taxable brokerage account can all hold investments, but their rules and purposes are different. Start with the job each account is designed to do.
At a glance
Five accounts, five starting points
| Account | Where it comes from | Tax idea | Best first question |
|---|---|---|---|
| 401(k) | Offered through an employer. | Traditional or Roth treatment may be available. | Does my employer match contributions? |
| Traditional IRA | Opened individually at a financial institution. | Contributions may be deductible; withdrawals are generally taxable. | Would a current deduction help me? |
| Roth IRA | Opened individually, subject to eligibility rules. | Contributions use after-tax dollars; qualified withdrawals are tax-free. | Would I rather pay tax now than later? |
| HSA | Available with an eligible high-deductible health plan. | Tax advantages can apply to contributions, growth, and qualified medical withdrawals. | Am I eligible, and can I cover near-term medical costs? |
| Taxable brokerage | Opened individually with no retirement-plan eligibility requirement. | Interest, dividends, distributions, and realized gains can create annual tax consequences. | Do I need flexible access before traditional retirement? |
2026 reference
Know the limits, then check your eligibility
Contribution limits are ceilings, not targets. Income rules, health-plan coverage, employer-plan terms, catch-up eligibility, and available cash all matter.
Combined IRA contribution limit before any eligible age-based catch-up amount.
Available only with eligible coverage and subject to HSA eligibility rules.
The family-coverage ceiling before any eligible age-based catch-up amount.
Figures are for 2026. Confirm current limits and eligibility with the IRS retirement contribution guidance and IRS HSA guidance.
01
401(k)
A 401(k) is a retirement plan sponsored by an employer. Contributions usually come directly from payroll, and the employer chooses the menu of investments available inside the plan.
Employer match
Some employers add money when you contribute. Understand the formula and any vesting rules.
Traditional or Roth
Traditional contributions generally reduce taxable income now. Roth contributions use after-tax dollars.
Investment menu
You usually select from funds chosen for the plan rather than every investment available in the market.
Changing jobs
Leaving an employer can create options such as keeping the plan, rolling it over, or moving to a new plan.
02
Traditional IRA
A Traditional IRA is an individual retirement account you open yourself. It can offer more investment choice than many workplace plans, while tax deductibility depends on your circumstances.
Possible deduction
Eligibility for a deduction can depend on income and access to a workplace retirement plan.
Tax-deferred growth
Tax is generally deferred while money remains in the account, with withdrawals usually taxed as income.
Broader choice
The provider you choose determines the investments, costs, and tools available to you.
Withdrawal rules
Retirement accounts have age and distribution rules, so they are less flexible than ordinary brokerage accounts.
03
Roth IRA
A Roth IRA uses money that has already been taxed. In exchange, qualified withdrawals can be tax-free, making the account especially valuable when future tax flexibility matters.
Tax paid today
Roth contributions do not create an income-tax deduction in the year they are made.
Qualified withdrawals
Following the account rules can allow both contributions and growth to come out tax-free.
Income eligibility
Direct contribution eligibility can phase out at higher incomes and changes over time.
Long horizon
Tax-free growth becomes more powerful when investments have many years to compound.
04
HSA
A Health Savings Account is available only when you meet health-plan eligibility rules. It is designed for medical costs, but unused money can remain invested and move with you between jobs.
Eligibility first
You generally need an eligible high-deductible health plan and cannot have certain other coverage.
Qualified medical costs
Withdrawals for qualified expenses can be tax-free when records and account rules are followed.
Portable balance
The account belongs to you, so changing employers does not erase the balance.
Cash versus investing
Keep enough accessible for near-term health costs before investing money needed soon.
05
Taxable brokerage
A taxable brokerage account has no retirement contribution ceiling and generally no age-based withdrawal rule. That flexibility comes with ongoing tax consequences and no special protection from market losses.
Flexible access
You can generally add or withdraw cash without retirement-account timing rules, though selling investments may create gains or losses.
Taxes along the way
Interest, dividends, fund distributions, and realized capital gains can affect a federal and state tax return.
Useful bridge account
Flexible access can help fund goals or early-retirement years before other income and account strategies begin.
Still goal-specific
Money needed soon should not take investment risk simply because the account allows immediate access.
Choosing an order
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Ask these questions before comparing funds
Is there an employer match?
A match can change which account deserves attention first.
When will I need the money?
Retirement and health accounts have rules that ordinary savings do not.
Do I value tax relief now or later?
Traditional and Roth treatment shift when income tax is generally paid.
What does the account cost?
Plan fees, fund expenses, advice charges, and trading costs all reduce what remains invested.
Tax treatment is only one part of the decision. Model the federal and simplified state effect, then return to the account rules and your time horizon.
Open the 2026 tax calculator