"There's a reason it pays to save for retirement in an IRA or 401(k). These accounts give you a tax break on your money, whereas a regular brokerage account won't. With a traditional IRA or 401(k), your money goes in on a pre-tax basis, and gains are tax-deferred. That means you don't pay taxes until you take withdrawals. With a Roth IRA or 401(k), your money goes in on an after-tax basis, but gains and withdrawals are tax-free."
"In 2026, savers under 50 can contribute up to $24,500 to their 401(k)s, while those 50 and over can contribute up to $32,500. Savers ages 60 to 63 can also make a catch-up contribution of $11,250 in 2026 instead of the general $8,000 catch-up that applies to older workers. So all told, people in this age group can contribute up to $35,750 to a 401(k) in 2026."
Traditional IRAs and 401(k)s use pre-tax contributions with tax-deferred gains, while Roth IRAs and 401(k)s use after-tax contributions with tax-free gains and withdrawals. IRA contribution limits for 2025 are $7,000 for those under 50 and $8,000 for those 50 and older; 2026 raises those limits to $7,500 and $8,600 respectively, with the IRA catch-up increasing from $1,000 to $1,100. 401(k) contribution limits for 2025 are $23,500 (under 50) and $31,000 (50+); 2026 raises them to $24,500 and $32,500, and adds a larger 60–63 catch-up enabling total contributions up to $35,750 for that age group.
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