The sooner you start saving, the better. The good news is that whether you work for a large corporation, a small business, or are self-employed, a retirement plan option exists to fit your specific situation.
The best retirement plans may be included as a benefit from your place employement, or can be opened by an individual through a bank, brokerage, or investment platform.
Our list of the top retirement plans focused on popular retirement plan options that provide workers with benefits like tax advantages, compound growth, and flexible investment options.
Below, find Business Insider's editors' top picks for the best retirement plans to grow your nest egg in 2025.
Open a New Retirement Account
$0
0%
Traditional IRAs, Roth IRAs, and SEP IRAs
Pros
Cons
SoFi is a great choice for traditional IRAs. In addition to other investing, loans and savings options, the advisor provides Roth and SEP IRAs.
SoFi IRA- Consider it if: You're new to investing and want a variety of low-cost retirement, investing, and savings options.
- App store rating: 4.8 iOS/4.3 Android
$0
0% ($5/month for Robinhood Gold)
Pros
Cons
- App store rating: 4.2 iOS/4.0 Android
- Consider it if: You want to trade crypto and invest in a wide range of stocks and ETFs.
401(k) Plans
For many US workers, the employer-sponsored 401(k) retirement plan offers a convenient and powerful way to build long-term savings. Commonly provided by for-profit companies, 401(k) retirement plans feature automatic paycheck deductions that are then invested.
Contributions to this retirement plan are either tax-deferred (traditional 401(k) plan) or allow tax-free growth and withdrawals (Roth 401(k) plan).
Charles Schwab, Vanguard, and Fidelity are some of the largest and most popular 401(k) retirement plan providers.
Many 401(k) plans include the benefit of an employer match, when your employer matches contributions to your retirement account up to a certain limit for every dollar you put into your account. Essentially, this is "free money" toward your retirement.
For instance, if you make $50,000 annually, and your company matches 50% of your 401(k) contributions up to 5% of your salary, you would need to contribute $2,500 into your account to receive the full match amount. Your employer would then contribute an additional $1,250 a year.
As is standard with most retirement plans, the IRS determines the annual 401(k) contribution limit and catch-up contribution limits for older workers. Employer-matching contributions to your retirement account do not count toward your annual contribution limit.
| Employee Age | 2025 Contribution Limit for 401(k) plans |
| Under 50 | Up to $23,500 per calendar year |
| 50+ | Up to $31,000 per calendar year |
| 60-63 | Up to $34,750 per calendar year |
Pros of 401(k) plans:
- Convenience of automatic payroll deduction for regular contributions
- Employer-match benefits
- Tax-deferred growth or tax-free withdrawals
- Higher catch-up contributions limit for those ages 60 to 63
Cons of 401(k) plans:
- The employer can limit investment options
- Typically high management fees, but generally covered by the employer
Pension Plans
Pension plans are a classic retirement plan in the US. They're employer-funded and provide guaranteed income for retired employees. Employers are required to make regular contributions to employees' retirement accounts.
Utility workers, government workers, teachers, union workers, and healthcare workers in the public sector may be offered pension plans as their retirement account benefit.
There are two main types of pension plans:
- Defined contribution plans: A 401(k) is technically considered a defined-contribution pension plan, and your employer is not responsible if your investments perform poorly in your retirement account.
- Defined benefit plans: Traditional pension plans are defined benefit plans (retirement plans with fixed, pre-established benefits). Employers must provide a certain dollar amount of retirement funds, calculated based on employee earnings and employment years.
Pros of Pension Plans:
- Guaranteed income for the rest of your life, regardless of investment performance
- Typically, the employer makes contributions to the pension plan
Cons of Pension Plans:
- No control over how funds are invested
- Risk of company going bankrupt and being unable to pay your benefits
- Can't access your pension until you retire
IRAs
Individual Retirement Accounts (IRAs) are retirement plans accessible to anyone with earned income. Whether you're unemployed, lack access to a workplace retirement plan, or want to pair your 401(k) earnings with a secondary retirement savings account, IRAs offer robust investment opportunities for the long term.
You can open one of the best IRAs (tax-deferred income) or one of the best Roth IRAs (tax-free growth and withdrawals) at most brokerage firms or online investment apps.
Even if you have a 401(k) or other employer-sponsored retirement account, you can usually set up a Roth IRA or traditional IRA for double the tax benefits. You can have as many IRAs as you want, but your total contribution amount between all your IRAs can't exceed the annual limit.
Some specialty IRAs to consider are:
- Self-directed IRAs: Self-directed IRAs (SDIRAs) give investors access to a wider range of investment options, including precious metals, commodities, and cryptocurrency. For example, the best bitcoin IRAs and the best gold IRAs are all types of SDIRAs.
- Rollover IRAs: If you leave your place of employment, you can roll over the assets (excluding unvested funds and stocks) to an old or existing 401(k) or similar account. The best rollover IRAs reduce your fees and give you greater control over your investments.
- Spousal IRAs: A retirement plan for married couples where one spouse doesn't earn taxable income. Spousal IRAs allow both spouses to contribute to a separate IRA as long as one spouse is employed and earns taxable income. This account allows the nonworking spouse to fund their own IRA.
- Payroll deduction IRAs: A retirement plan for small businesses and self-employed people. Businesses delegate the hard work to banks, insurance companies, or other financial institutions. After determining which institutions their employer has partnered with, employees can set up payroll deductions to fund their IRAs with those institutions.
| Employee Age | 2025 Contribution Limit for IRAs |
| Under 50 | Up to $7,000 per calendar year |
| 50+ | Up to $8,000 per calendar year |
Pros of traditional and Roth IRAs
- Accessible to anyone with an income
- Low-cost investment options and management fees
- Tax-deferred income or tax-free growth and withdrawals
Cons of traditional and Roth IRAs
- Lower contribution limit compared to some other retirement plans
- Only a select few IRA providers (Robinhood and Acorns) offer IRA match benefits
Thrift Savings Plans
Thrift Savings Plans (TSPs) are essentially the 401(k) for federal government and military employees. Like a 401(k) retirement plan, a TSP lets you contribute pre- or after-tax dollars.
Some TSPs offer employer match benefits of up to 5% of your salary.
| Employee Age | 2025 Contribution Limit for 401(k) plans |
| Under 50 | Up to $23,500 per calendar year |
| 50+ | Up to $31,000 per calendar year |
| 60-63 | Up to $34,750 per calendar year |
Pros of TSPs:
- Up to a 5% employer match
- Investors ages 60-63 are eligible for a higher catch-up contribution of up to $11,250
- Low investment fees
Cons of TSPs:
- Must be a government or military employee to qualify for this retirement plan
- Strict rules for early withdrawals and loans
457(b)s
A 457(b) is a retirement savings account offered by state and local governments and tax-exempt organizations. You can contribute to your 457(b) plan by asking your employer to withhold a portion of your paycheck and deposit it in your retirement plan. Some employers allow you to make Roth contributions.
Since 457(b)s are supplemental savings plans, you can withdraw early before age 59 ½ without being subjected to a 10% penalty.
| Employee Age | 2025 Contribution Limit for 457(b)s |
| Under 50 | Up to $23,500 per calendar year |
| 50+ | Up to $31,000 per calendar year |
| 60-63 | Up to $34,750 per calendar year |
Pros of 457(b)s:
- Catch-up savings provisions available for older employees
- Tax-deferred income or tax-free growth
Cons of 457(b)s:
- Must be an employee of the state or local governments or a tax-exempt organization
- Typically does not offer an employer match
403(b)s
A 403(b), or tax-sheltered annuity, is a retirement plan offered by public schools, churches, and similar nonprofit organizations. This retirement plan operates similar to a 401(k) retirement plan, allowing employees to contribute either pre- or after-tax money.
Your employer may provide an employer-match benefit. However, you are limited to the investment options your employer chooses to include in your plan.
| Employee Age | 2025 Contribution Limit for 403(b)s |
| Under 50 | Up to $23,500 per calendar year |
| 50+ | Up to $31,000 per calendar year |
| 60-63 | Up to $34,750 per calendar year |
Pros of 403(b)s:
- Automatic payroll deductions to your retirement plan
- Tax-deferred growth or tax-free withdrawals
- Employer match benefits
Cons of 403(b)s:
- Investment options are limited by the employer retirement plan
Solo 401(k)
If you are self-employed with no employees, a solo 401(k) plan is a more robust retirement plan than a standard traditional or Roth IRA. Solo 401(k)s have a much higher contribution limit than a standard IRA. You may also be eligible for a 401(k) loan in an emergency with a solo 401(k).
With a solo 401(k), you can contribute as both an employer and employee, meaning you can contribute twice as much. Spouses of business owners may be able to contribute as well. Accounts are funded by pre- or post-tax (Roth) contributions.
Your combined employer and employee contributions cannot exceed $70,000 or 25% of your after-tax compensation, whichever is less.
| Age | 2025 Contribution Limit as Employer | 2025 Contribution Limit as Employee |
| Under 50 | Up to 25% of your compensation, capped at $46,500 per year | Up to 100% of your compensation, capped at $23,500 per year |
| 50 and up | Up to 25% of your compensation, capped at $46,500 per year | Up to 100% of your compensation, capped at $31,500 per year |
| 60-63 | Up to 25% of your compensation, capped at $46,500 per year | Up to 100% of your compensation, capped at $34,750 per year |
Pros of solo 401(k):
- Contribute both as an employee and employer to your retirement plan
- Higher catch-up contribution limit for those ages 60-63
- Tax-deferred income or tax-free withdrawals
- Spouses can be added to a solo 401(k) retirement plan
Cons of solo 401(k):
- Must be a business owner or spouse of a business owner to qualify for this retirement plan
- Must make regular contributions for an account to remain active
- Can't have any employees, excluding a spouse
SEP IRA
A SEP IRA is a retirement plan designed for employees of small businesses and self-employed individuals who are at least 21 years old, have worked for the same employer for at least three of the last five years, and have earned a minimum of $750.
SEP IRAs require that all contributions to the retirement plan are 100% vested. This means that each employee holds immediate and complete ownership over all contributions to their account, including any employer match.
Vesting protects employees against financial loss. For instance, according to the IRS, an employer can forfeit amounts of an employee's account balance that aren't fully vested if that employee hasn't worked more than 500 hours in a year for five years.
| Contributor | 2025 Contribution Limit for SEP IRA |
| Employer (business owner) | Up to 25% of eligible employee compensation, up to $70,000 per calendar year |
| Employees under 50 (if applicable) | Up to $7,000 per calendar year |
| Employees 50 and older (if applicable) | Up to $8,000 per calendar year |
Pros of SEP IRA:
- Employers must make equal contributions to all eligible employees' retirement plans
- Immediately vested employer contributions
- Tax-deferred income or tax-free withdrawals
Cons of SEP IRA:
- Only employer contributions are allowed
- Employers must make equal contributions to all eligible employees
SIMPLE IRA
These retirement plans require employers to match each employee's contributions on a dollar-for-dollar basis up to 3% of the employee's salary.
To qualify, employees (and self-employed individuals) must have made at least $5,000 in the last two years and expect to receive that amount during the current year. But once you meet this requirement, you'll be 100% vested in all your SIMPLE IRA's earnings, meaning you have immediate ownership over your and your employer's contributions in your retirement account.
| Employee Age | 2025 Contribution Limit for SIMPLE IRAs |
| Under 50 | Up to $16,500 per calendar year |
| 50+ | Up to $20,000 per calendar year |
| 60-63 | Up to $21,750 per calendar year |
Pros of SIMPLE IRAs:
- Tax-deferred income or tax-free withdrawals
- Employer match benefits (up to 3%)
- Immediate vesting
Cons of SIMPLE IRAs:
- Doesn't allow loans
- Don't offer the same level of creditor protection against bankruptcy as traditional IRAs
Annuities
Annuities are investment vehicles purchased from insurance companies at a premium. Retirees receive periodic payouts during retirement once they purchase an annuity using pre-tax or after-tax dollars. Annuities offer a reliable income stream for retirees and assurance that they won't outlive their savings.
The funds in an annuity can also be invested. The investment gains grow tax-free before you start receiving payouts, but you'll still be liable for paying income tax. Plus, annuities have limited liquidity and high fees that may diminish potential gains.
Pros of Annuities:
- Offer a reliable income stream for a fixed period, or even the rest of someone's life
- Tax-deferred growth
- Low risk and decreased market volatility
Cons of Annuities:
- High fees
- Annuity payouts incur income tax
- Limited liquidity
Health Savings Accounts (HSAs)
Health Savings Accounts (HSAs) are savings accounts designed to cover medical expenses, but can double as retirement savings. Once you're 65, you can withdraw the funds from your HSA penalty-free for non-medical expenses.
An HSA account is a good fit for pre-retired workers with an already established retirement savings account, with the financial flexibility to set aside money for future medical expenses.
While it isn't a great main retirement savings vehicle, it can be a smart addition to a different long-term savings account. In addition to penalty-free withdrawals on qualifying expenses, HSAs are funded with pre-tax dollars and grow tax-free. You'll still be subject to income tax.
| Employee Age | 2025 Contribution Limit for HSAs |
| Under 55 | Up to $4,300 for self-coverage and $8,550 for family coverage per calendar year |
| 55+ | Up to $5,300 for self-coverage and $8,550 for family coverage per calendar year |
Pros of HSAs:
- Funds can be used penalty-free for healthcare costs before or after retirement
- Lowers your taxable income
- Can be carried over from one job into the next and into retirement
Cons of HSAs:
- You must have a high-deductible health plan to open an HSA
- You will be charged a 20% tax if funds are used for non-qualified expenses
Choosing the Best Retirement Plan for You
Deciding which of the best retirement plans is right for your financial situation depends on your place of employment, marital status, income, and investment preferences.
If you have access to a retirement plan from your employer — 401(k), pension, 403(b), or 457(b) — that is the best place to start. Employer-sponsored plans have the additional benefits of automatic payroll deductions, potential for low to no management fees, and the possibility of employer-matching contributions.
Workers who don't have access to an employer-sponsored retirement plan should consider an IRA. Contribution limits for IRAs are significantly lower than those for 401(k) plans and similar plans, but the IRA makes up for this with low management fees and greater investment flexibility. Exact fees and available investment options vary by IRA provider.
While there is no income cap for a traditional IRA, you can only make a full Roth IRA contribution if your modified adjusted gross income (MAGI) is less than $150,000 as a single filer, or $236,000 as a married couple filing jointly, in 2025.
Small business owners and self-employed individuals can open a SEP IRA, Solo 401(k), or SIMPLE IRA to unlock tax advantages and investment opportunities for themselves and their employees.
Solo 401(k) plans are best for self-employed people with no employees (excluding spouses). You can't qualify for a solo 401(k) if you have even one employee.
Business owners with fewer than a hundred employees can open a SEP IRA or SIMPLE IRA. SEP IRAs are best for business owners who want to contribute solely to their employees' retirement plans, as employees cannot contribute. Contribution limits for SEP IRAs are significantly higher than those of a SIMPLE IRA. That said, SIMPLE IRAs allow both employers and employees to contribute. In this instance, employers must contribute, but employee contributions are optional.
Managing your retirement account
With your retirement account now open, the next step is understanding how to manage it.
Monitoring and adjusting your plan
As you near retirement age, your investments should become more conservative to decrease your losses while keeping up with inflation. Bonds are the best low-risk investments for conservative portfolios. While bond-heavy portfolios are less likely to run out of money if stocks crash, they also grow more slowly than equity-heavy portfolios do in good times.
Target-date funds automatically rebalance your retirement portfolio toward safer investments over time, making them a simple "set-and-forget" option for many people. You simply choose your retirement date, and the fund will automatically rebalance your portfolio as time passes, making it more conservative over time.
Understanding your retirement plan's fees, rules, and taxes
Beyond asset allocation, be sure you understand your retirement account's contribution limits, withdrawal rules, management fees, eligibility, and tax implications.
In most cases, you won't be able to withdraw from your retirement plan until you're at least 59 ½. Otherwise, the IRS will charge you a 10% premature penalty fee. This fee may be waived in an emergency with a qualified 401(k) hardship withdrawal or loan.
A retirement plan charges investment and management fees like any managed investment account. Employers generally pay these fees while you're an employee. But once you leave, whether for retirement or a new opportunity, those fees will become your responsibility.
Finally, if you have a 401(k) or similar plan, familiarize yourself with its vesting rules. Being fully vested in your 401(k) plans means you have complete ownership. Once you become 100% vested, any employer contributions to your account are yours to keep.
Why You Should Trust Us: Our Expert Panel For The Best Retirement Plans
We interviewed the following investing experts to see what they had to say about retirement savings plans.
- Sandra Cho, RIA, wealth manager, and CEO of Pointwealth Capital Management
- Tessa Campbell, Investment and retirement reporter at Personal Finance Insider
What are the advantages/disadvantages of investing in a retirement plan?
Sandra Cho:
"The main advantage is the tax implications of the account. Depending on the account, taxes will either be deferred or not included at all. For employer-sponsored retirement plans like 401(k)s, contributions to the plan are made with pre-tax funds, and the account grows tax-deferred. Taxes are then owed upon withdrawal.
"Roth IRAs, on the other hand, are contributed to with post-tax funds but grow tax-free. Both should be included in an investor's portfolio. Another advantage is that 401(k)s often have an employer matching component. That is, an employer will match your contributions up to a certain point (usually around 3% of your salary).
"The disadvantage is that retirement accounts have a max contribution limit. Another disadvantage is that these funds cannot be used until age 59 1/2. For younger investors, that can be a long time wait."
Tessa Campbell:
"Tax benefits and compound interest are two of the major advantages of contribution to a retirement savings plan like a 401(k) or individual IRA. Depending on the kind of plan you open (traditional or Roth), you can benefit from contributions after- or post-tax dollars. In addition, some 401(k) plans are eligible for employer-sponsored matches, which are essentially free money.
"The disadvantage of a retirement plan is that you won't be able to access the funds in your account penalty-free until you're at least 59 1/2 years old. Unless there are no other options, early withdraws from a retirement savings plan isn't advised."
Who should consider opening a retirement plan?
Sandra Cho:
"Every individual should be investing through a retirement plan if they have the financial capability to. At the minimum, investors should try to contribute up to the matching amount for their 401(k) and the maximum amount for their Roth IRA. The growth in these funds compounds over time, helping to enhance the long-term return."
Tessa Campbell:
"I can't think of a single person that wouldn't benefit from a retirement savings plan, other than maybe someone that is already well into retirement. Although some younger individuals don't feel the need to start contributing quite yet, it's actually better to open an account as soon as possible and take advantage of compound interest growth capabilities."
Is there any advice you'd offer someone who's considering opening a retirement plan?
Sandra Cho:
"I would advise them to work with a financial advisor or trusted professional. This will give them insight into where they should be investing their money, whether that be a 401(k), Roth IRA, or another vehicle. There are plenty of people and sources out there who provide important information and can help you create a strong financial future."
Tessa Campbell:
"Don't contribute huge portions of your salary if it doesn't make sense with your budget. While contributing to a retirement savings plan is important, you must still afford your monthly expenses and pay down an existing debt. If you're having trouble establishing a reasonable budget, consult a financial advisor or planner for professional help."
FAQs
What is the best retirement plan?
A 401(k) is often regarded as the best retirement plan due to its large contribution limits, powerful investment options, tax-advantages, and employer-match contributions. However, not all employers offer 401(k)s. Other top retirement plans to consider are IRAs, 403(b)s, 457(b)s, and Thrift Savings Plans.
What is the best retirement plan for high earners?
The best retirement plan for high earners is a traditional 401(k), as you can contribute up to $23,500 if you're under 50 in 2025. If you are 50 or older, you can make additional catch-up contributions up to $7,500.
Can I save for retirement if I'm self-employed?
You can save for retirement if you're self-employed using a SEP IRA, SIMPLE IRA, or solo 401(k) plan. Solo 401(k)s are best for self-employed workers with no employees (not including a spouse). You can't have more than 100 employees to qualify for a SEP IRA or SIMPLE IRA.
