401(k), 403(b) and IRAs

What to know

1. Ask HR whether there's a plan, when you can join and whether there's a match. Federal law lets plans require you to be 21 with a year of service first, but many let you in sooner, and part-timers who work 1,000 hours a year may qualify. Source: DOL⁶
2. Get the full match. Your employer may match a percentage of what you put in. Source: DOL⁶ Contributing less than the match leaves part of your pay on the table. See Choosing your benefits for a worked example.
3. Choose pre-tax or Roth, if your plan offers both. Pre-tax 401(k) contributions go in before tax, and withdrawals are taxed later. Roth 401(k) and Roth IRA contributions go in after tax, and qualified withdrawals, after 59½ and at least five years in the account, are tax-free. Source: IRS³ You can split between the two, as long as the total stays under the limit. Source: IRS³
4. Check the vesting schedule. Your own contributions are always 100% yours. The employer's match may take up to 3 years (cliff) or 6 years (graduated) to be fully yours. Source: DOL⁶
5. Pick your investments. If you were enrolled automatically and don't choose, your money goes into a predetermined investment. Source: DOL⁶ Look up what it is and what it charges. See Index funds and fees.
6. No plan at work, or want more? Open an IRA. For 2026 you can put in up to $7,500 total across traditional and Roth IRAs, Source: IRS¹ but not more than you earned that year. Source: IRS² Roth IRAs phase out for single filers with income between $153,000 and $168,000. Source: IRS¹
7. Check the Saver's Credit at tax time. If you're 18 or older, not claimed as a dependent and not a full-time student, you can get a credit of 50%, 20% or 10% of up to $2,000 you put into an IRA or workplace plan, depending on income. That's up to $1,000 back. Source: IRS⁴ For 2026, the income limit is $40,250 for single filers. Source: IRS¹

2026 limits

From the IRS. Source: IRS¹

Pre-tax vs. Roth

From the IRS comparison chart. Source: IRS³

Qualified generally means the account has been open at least five years and you're 59½ or older, disabled, or it's after your death.

Exceptions to the 10% early tax

• Up to $1,000 a year for a personal or family emergency, from a plan or IRA. Source: IRS⁵
• Up to $5,000 per child for birth or adoption expenses. Source: IRS⁵
• From an IRA only: qualified higher education expenses, and up to $10,000 for a first-time home purchase. Source: IRS⁵
• Total and permanent disability. Source: IRS⁵
• Income tax still applies to most of these; the exception only removes the extra 10%. Source: IRS⁵

If it doesn't work

• If you were automatically enrolled, you can usually change your contribution amount or investments on the plan website.
• If you leave the job, you can generally keep your vested money in the old plan, or roll it into a new employer's plan or an IRA. Source: DOL⁷ Moving it within 60 days as a rollover avoids the early tax. Source: IRS⁵
• If you can't tell what you're invested in, call the plan's phone number and ask for the fees and the default fund.