Types of Retirement Accounts: 401(k)s, IRAs, Pensions, and HSAs Explained

US retirement accounts fall into three main groups: employer plans like the 401(k), personal accounts you open yourself like the IRA, and older traditional pensions, with the Health Savings Account as a useful fourth tool. Knowing which type you have, and which you should open, is the first practical step in building a retirement plan. They differ in who sets them up, how much you can put in, and whether you get the tax break now or later.

When I sat down to sort out my own situation in my late fifties, I had a confusing pile: a 403(b) from teaching, two old 401(k)s, and a Roth IRA I had half forgotten. It turned out they were just variations on a few simple ideas. Here is the whole landscape in plain English.

Employer plans: the 401(k) and its cousins

Employer plans are retirement accounts offered through your job, and they let you save the most. The 401(k) is the best known, used by private companies, but it has near-identical cousins: the 403(b) for public schools and nonprofits, the 457 for state and local government workers, and the Thrift Savings Plan (TSP) for federal employees and the military.

They all work the same way. Money comes straight out of your paycheck before you ever see it, and in 2026 you can contribute up to $24,500, plus an extra $8,000 catch-up contribution once you turn 50. The best feature is the employer match: many employers add money when you do, which is simply free pay you should never leave on the table. We cover all of this in 401(k) plans explained.

Personal accounts: the traditional and Roth IRA

An Individual Retirement Account (IRA) is a personal account you open yourself, separate from any employer. You set one up at a brokerage, bank, or fund company and choose your own investments. The 2026 limit is $7,500, with a $1,100 catch-up once you turn 50.

The IRA comes in two flavors, the traditional and the Roth, which is the same tax choice that runs through nearly every account on this page. An IRA does not replace a workplace plan; it complements one. A common order is to contribute enough to a 401(k) to grab the full match, then fund an IRA for its wider investment choice and lower costs, then return to the 401(k). I keep a Roth IRA precisely because it gives me low-cost index funds my old 403(b) never offered. The full detail lives in IRA accounts explained.

Traditional pensions: the disappearing promise

A traditional pension, or defined benefit plan, promises a set monthly income for life rather than a balance you build up. Instead of investing your own contributions, your employer funds and manages the plan, and pays you a figure based on your salary and years of service. Teachers, government workers, and some long-tenured private employees still have them.

These are far less common than they once were; most companies have replaced them with 401(k)s, which shift the investment risk onto you. Most private pensions are insured by the Pension Benefit Guaranty Corporation (PBGC), so benefits are protected up to federal limits if the plan fails. If you have one, you often face a one-time choice between a lump sum and a monthly income, which is a significant and usually irreversible decision. See traditional pensions explained.

The traditional vs Roth choice runs through all of them

Almost every retirement account comes in a traditional (pre-tax) or Roth (after-tax) version, and choosing between them is the single biggest tax decision you will make. With a traditional account you get a tax break now and pay ordinary income tax on withdrawals later. With a Roth you get no break now, but qualified withdrawals in retirement are completely tax-free.

This choice applies whether the account is a 401(k) or an IRA. One important difference: traditional accounts have required minimum distributions starting at age 73, while Roth IRAs have none for the original owner. We weigh it up in detail in traditional vs Roth.

The Health Savings Account: a bonus retirement tool

A Health Savings Account (HSA) is not technically a retirement account, but its triple tax advantage makes it one of the best places to save for retirement health costs. It is available only if you have a qualifying high-deductible health plan, and it is the only account where contributions are deductible, growth is tax-free, and withdrawals for medical expenses are tax-free too.

The retirement trick is that after age 65 you can withdraw for any reason without a penalty; non-medical withdrawals are simply taxed as income, exactly like a traditional IRA. Since health care is one of the largest expenses in retirement, and Medicare does not cover everything, an HSA is a quietly powerful tool. We explore it in health savings accounts.

How to choose which accounts to use

For most people the order of operations is straightforward: contribute enough to a workplace plan to get the full match, fund an IRA, top up the workplace plan, and use an HSA if you qualify. The accounts are then invested, usually in low-cost index or target-date funds, so they can grow over the decades, and remember that invested money can lose value.

This is general information, not personalized advice; the right mix depends on your income, your employer’s plan, and your tax picture. Free official tools at IRS.gov and Investor.gov can help, and for bigger decisions a fiduciary advisor can too, as we cover in choosing a financial advisor. To see how all the accounts fit into one income, start with the retirement planning pillar.