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Money

401(k), 403(b) and IRAs

A 401(k) or 403(b) is a retirement account through work, paid straight from your paycheck. An IRA is one you open yourself. For 2026, you can put up to $24,500 into a 401(k) or 403(b) and up to $7,500 into IRAs.

Moderate20 min to doFree to set up

You'll need

  • Your employer's benefits or plan information
  • Your login for the plan website

Do it like this

  1. Ask HR whether there's a retirement plan, when you can join, and whether the employer matches contributions.
  2. If there's a match, try to contribute at least enough to get all of it. Employers can choose to match part of what you put in (U.S. Department of Labor).
  3. Check the vesting schedule. Your own contributions are always 100% yours, but you may have to work several years to keep all of the employer's match (U.S. Department of Labor).
  4. Pick your investments. If you were enrolled automatically and don't choose, your money goes into a predetermined investment (U.S. Department of Labor). Look at its fees.
  5. Know the limits. For 2026: $24,500 for 401(k), 403(b) and governmental 457 plans, and $7,500 across all your traditional and Roth IRAs (IRS).
Watch out. Taking money out early can cost you. The law puts a 10% additional tax on certain early distributions from retirement plans, on top of regular income tax (IRS). Build a separate emergency fund for surprises.

If it doesn't work

  • If you were automatically enrolled, you can usually change your contribution amount or your investments. Check the plan website or ask HR.
  • If you leave the job, you can generally leave the money in the plan or move it to an IRA or a new employer's plan (U.S. Department of Labor).
  • 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.

Good to know

Automatic enrollment

Some plans enroll you automatically and take a set amount from each paycheck unless you opt out (U.S. Department of Labor).

Traditional vs. Roth IRA

Traditional IRA contributions may be tax-deductible, depending on your income and whether you have a plan at work. The $7,500 limit is shared across traditional and Roth IRAs (IRS).

Can't exceed what you earn

Your IRA contributions for the year can't be more than your taxable compensation if that's less than the limit (IRS).

Sources

  1. Internal Revenue Service 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500
  2. Internal Revenue Service Retirement topics: IRA contribution limits
  3. Internal Revenue Service Topic no. 558, Additional tax on early distributions from retirement plans
  4. U.S. Department of Labor What you should know about your retirement plan

Lesson M9.2 · Last checked October 2, 2026 against the sources listed. See a mistake?