Retirement Planning • Accounts
How workplace plans and IRAs work, how traditional and Roth accounts differ, this year’s contribution limits, and the plans teachers, government and nonprofit employees use.
The big difference is when the tax is paid: now (Roth) or later (traditional). Many people use both, which is the idea behind the tax buckets.
| Feature | Traditional | Roth |
|---|---|---|
| Money goes in | Usually before tax (401(k)) or possibly tax-deductible (IRA) | After tax |
| Withdrawals | Taxed as ordinary income | Qualified withdrawals are tax-free |
| Required minimum distributions | Yes, starting at 73 (75 if born 1960 or later) | None for Roth IRAs or Roth 401(k)s while the owner is alive |
| Income limits to contribute | None for contributions; the IRA deduction can phase out | Roth IRA contributions phase out at higher incomes |
| Often compared when | Someone expects a lower tax rate in retirement | Someone expects a higher tax rate in retirement |
We’ll cover Roth vs. traditional in more depth in the future. For the workplace version, see Don’t Leave the Company Match on the Table - It’s Free Money.
Limits usually rise every year. This is the one table of yearly limits on the site; for any other year, check IRS.gov.
| Account or rule | 2026 |
|---|---|
| 401(k), 403(b), governmental 457(b) and TSP: employee contributions | $24,500 |
| Catch-up in those plans, age 50 and older | +$8,000 |
| Higher catch-up, ages 60 to 63 (instead of the age-50 catch-up) | +$11,250 |
| Traditional and Roth IRA, combined | $7,500 |
| IRA catch-up, age 50 and older | +$1,100 |
| Roth IRA income phase-out, single or head of household (MAGI) | $153,000 to $168,000 |
| Roth IRA income phase-out, married filing jointly (MAGI) | $242,000 to $252,000 |
Limits are per person. 401(k), 403(b) and TSP contributions share one limit; a governmental 457(b) has its own, so it can be used alongside them. From 2026, catch-ups by people whose prior-year Social Security (FICA) wages from that employer were above $150,000 generally must be Roth. Sources: IRS: 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500; IRS Notice 2025-67: 2026 retirement plan limits (PDF); TSP: 2026 TSP contribution limits (bulletin 25-3). The IRS usually announces the next year’s limits in late October or November; current figures are always on IRS.gov.
Not everyone has a 401(k). Schools, hospitals, nonprofits and governments offer their own plans. They work in similar ways, with a few important differences.
Schools, hospitals, nonprofits
Offered by public schools, colleges, churches and many nonprofits, including hospitals. It works much like a 401(k), often with traditional and Roth options, and shares the same yearly limit. Some plans allow an extra catch-up after 15 years with the same employer, and accounts are held in annuity contracts or mutual fund accounts chosen by the employer, so fees are worth comparing.
Current rules and limits: IRS.gov: 403(b) plans
State and local government
Offered to state and local workers such as firefighters, police officers and, in some districts, teachers. It has its own separate limit, so it can be used alongside a 403(b) or 401(k). Withdrawals aren’t hit by the 10% early-withdrawal tax (except money rolled in from other plans), and some plans allow a larger catch-up in the final years before retirement. Non-governmental 457(b) plans at some nonprofits work differently.
Current rules and limits: IRS.gov: 457(b) plans
Federal and uniformed services
The retirement savings plan for federal employees and members of the uniformed services, with traditional and Roth options and the same yearly limit as a 401(k). Employees under FERS and eligible BRS members also get agency contributions: an automatic 1% of basic pay plus a match on what they put in.
Current rules and limits: TSP.gov: contribution types
Many public employers
A pension (defined benefit plan) pays a set monthly income in retirement, usually based on salary and years of service. A 401(a) is an account-based plan some public employers use, often with a required contribution. Some public jobs don’t pay into Social Security, so the pension takes its place for that work.
Current rules and limits: IRS.gov: plan definitions
Social Security Fairness Act (2025): this law ended the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO), which had reduced Social Security for some people with a pension from work not covered by Social Security. See SSA.gov.
See also Taxes in retirement and the glossary.
Checked October 2026. Amounts that change every year are linked to their official source rather than repeated here. Official pages can change; listing is not an endorsement.