Glossary
Retirement Contribution
A retirement contribution is the money you set aside—typically into accounts like a 401(k), IRA, or 403(b)—to fund your future retirement. Contributions can be made on a pre-tax or after-tax (Roth) basis, and many accounts have annual limits set by the IRS.
What types of retirement accounts accept contributions?
Common options include 401(k), 403(b), Traditional IRA, Roth IRA, SEP IRA, and SIMPLE IRA accounts.
What’s the difference between pre-tax and Roth contributions?
Pre-tax contributions reduce your taxable income now, but withdrawals are taxed in retirement. Roth contributions are made with after-tax income, but withdrawals in retirement are tax-free.
How much can I contribute to retirement accounts each year?
As of 2025, individuals can contribute up to $23,000 to a 401(k) and up to $7,000 to an IRA, with additional catch-up contributions allowed for those age 50 and older.
Can I contribute to more than one retirement account?
Yes, you can contribute to both a 401(k) and an IRA in the same year, as long as you stay within the IRS limits and eligibility rules.
Why are regular contributions important for retirement?
Consistent contributions help build your retirement nest egg over time and take advantage of compound growth, especially when started early.
Are employer contributions the same as my own?
No. Employer contributions (like 401(k) matches) are additional funds that don’t count toward your personal annual limit but do count toward the plan’s overall contribution cap.
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