Building a secure financial future requires long-term planning, and choosing the right retirement account is one of the most powerful steps you can take. Today, a variety of tax-advantaged accounts can help you grow your retirement savings while potentially reducing your tax burden. In this guide, we’ll explore different types of retirement accounts and tax-advantaged options, along with links to trusted resources where you can learn more or get started.

Traditional IRA (Individual Retirement Account)

A Traditional IRA is a popular choice for retirement savings, offering tax-deductible contributions that can reduce your taxable income in the current year. Earnings in a Traditional IRA grow tax-deferred, meaning you won’t pay taxes until you start making withdrawals in retirement.

Contribution Limits: As of 2024, you can contribute up to $6,500 annually (or $7,500 if you’re over 50).

Best for: Individuals looking for an immediate tax break.

Resources to Explore:

Vanguard: Known for low-cost funds, Vanguard offers an easy way to set up and manage IRAs.

Fidelity: Fidelity’s extensive investment options and tools make it a solid choice for Traditional IRAs.

Roth IRA

A Roth IRA offers no immediate tax deduction, but qualified withdrawals in retirement are tax-free. This account is ideal for those who expect to be in a higher tax bracket in retirement, or anyone who appreciates the benefit of tax-free income in retirement.

Contribution Limits: Also $6,500 annually (or $7,500 if you’re over 50), with eligibility based on income.

Best for: People seeking tax-free growth and flexibility in retirement.

Resources to Explore:

Charles Schwab: Schwab’s Roth IRA offers no account fees and provides access to extensive retirement planning tools.

Betterment: A great option for hands-off investors, Betterment manages a Roth IRA with a simple, automated investment approach.

401(k) Plans

A 401(k) plan, typically offered through employers, allows you to make pre-tax contributions directly from your paycheck, lowering your taxable income. Many employers match a portion of contributions, which can significantly boost your retirement savings.

Contribution Limits: Up to $23,000 annually in 2024 (or $30,000 if you’re over 50).

Best for: Employees looking for employer-matched contributions and tax-deferred growth.

Resources to Explore:

Empower: This company provides extensive retirement plan management for both employers and individuals.

Vanguard: Vanguard is also popular for 401(k) plans, particularly with employers who want to offer low-cost investment options.

SEP IRA (Simplified Employee Pension IRA)

For self-employed individuals or small business owners, a SEP IRA provides a simple, tax-advantaged retirement option with higher contribution limits than Traditional and Roth IRAs.

Contribution Limits: Up to 25% of compensation, or $66,000 in 2024, whichever is less.

Best for: Self-employed individuals or small business owners looking for a straightforward, tax-efficient retirement plan.

Resources to Explore:

TD Ameritrade: Known for its robust investment platform, TD Ameritrade offers SEP IRAs with low fees.

Fidelity: Fidelity’s SEP IRAs are popular for their flexibility and support for small business owners.

Health Savings Account (HSA)

Though not exclusively a retirement account, a Health Savings Account (HSA) is a powerful tax-advantaged tool. Contributions are tax-deductible, earnings grow tax-free, and withdrawals for qualified medical expenses are also tax-free. After age 65, funds can be withdrawn for any purpose (though withdrawals for non-medical expenses will be taxed).

Contribution Limits: $3,850 for individuals and $7,750 for families in 2024.

Best for: Individuals with a high-deductible health plan who want to save for healthcare expenses or boost retirement savings.

Resources to Explore:

Lively: Lively offers a user-friendly, no-fee HSA, allowing you to invest funds tax-free.

HSA Bank: With a range of investment options and easy access to HSA funds, HSA Bank is a trusted provider in this space.

529 College Savings Plan

While primarily a college savings tool, a 529 plan can also be a valuable tax-advantaged savings vehicle for those planning to support their children’s education. Contributions are made with after-tax dollars, but earnings grow tax-free if used for qualified education expenses.

Best for: Parents or grandparents saving for a child’s college education.

Resources to Explore:

Saving for College: This site offers resources and links to various 529 plans across the country.

Fidelity: Fidelity’s 529 plans come with a wide range of investment options and resources for college savings planning.

Choosing the Right Account for You

Deciding which retirement or tax-advantaged account is right for you will depend on factors such as your income level, tax bracket, age, and financial goals. Many financial advisors recommend a mix of pre-tax and after-tax accounts, allowing for flexibility in retirement.

If you’re unsure where to start, check out NerdWallet or Bankrate, where you’ll find up-to-date comparisons and expert advice on different account options.

Start Building Your Future Today

No matter where you are in your financial journey, choosing the right tax-advantaged accounts can make a significant difference in your retirement savings. Explore the resources linked above to learn more about each option, and take the first step towards a financially secure future.