The alphabet soup of retirement plan options can be overwhelming. What’s the difference between a 401(k), 403(b), 457, SIMPLE and IRA plans? Here’s what both employers and individuals need to know.

Employer-Sponsored Retirement Plan Options

401(k), 403(b), and 457 plans

From the outside, 401(k), 403(b), and 457 plans can look similar. They have the same annual contribution limits and are all workplace retirement plans. But they differ in the type of entity that can offer each type of plan:

• 401(k)s are offered by for-profit companies;
• 403(b)s are offered by nonprofit entities and schools, and
• 457 plans are generally available for governmental employees.

Distribution options and catch-up contribution limits can also differ between these plans.

What’s the difference between pretax and after-tax contributions?

All of these plans offer tax deferred (pretax) contributions, and some offer after-tax contributions. This impacts your tax situation both at the time you make contributions as well as when you take withdrawals from your retirement account.

Pretax contributions reduce your taxable income and current tax liability. You pay taxes when you make withdrawals at then-current tax rates. The strategy assumption with pretax contributions is that your tax bracket will be higher during your working years and lower in your retirement years. However, that’s not always the case. Tax rules change frequently, and your retirement income may be higher than you expected.

With after-tax (sometimes called Roth) contributions, you pay taxes as normal. Contributions are deposited into your account and earn investment income over time. When you ultimately take money out of a Roth account, no taxes are due either on the contributions (which were taxed at the time they were made) or on what the account earned.

Contributions can come from both employees and employers

Employer contributions can be a flat amount (usually a percentage of your salary) or a match. Matching contributions are often structured as a formula based on your contribution, such as matching 50% of employee contributions up to 6% of pay. If your employer offers a matching contribution, you should try to contribute an amount that allows you to receive the full amount. These employer contributions can be made on either a pretax or after-tax basis, depending on the plan’s provisions.

Employees who are at least age 50 can contribute the maximum amount to their retirement account plus make a catch-up contribution. If you’re between ages 60-63, you can make a “super catch-up” contribution to your 401(k), 403(b), or 457 plan. Here are the annual contribution limits for 2026 (these are indexed each year for inflation):

• Regular contribution – $24,500
• Catch-up contribution for employees age 50+ – $8,000
• Super catch-up contribution for employees age 60-63 – $11,250

This means that an employee over age 50 could contribute a total of $32,500 to their retirement plan in 2026, and an employee age 60-63 could contribute a total of $35,750.

Beginning in 2026, there’s a new rule for employees who made more than $150,000 in 2025, requiring that their catch-up contributions to workplace plans must be made on an after-tax basis.

SIMPLE Plans

SIMPLE plans look a lot like 401(k) plans, except their operation is . . . simpler. They’re only available to small businesses with 100 or fewer employees.

An employer can establish a SIMPLE plan by adopting either Form 5304-SIMPLE or Form 5305-SIMPLE, depending on whether the employer is using a designated financial institution. By contrast, a 401(k) plan requires a lengthy plan document.

Annual contribution limits are lower than for the other employer-sponsored plans described above. The maximum contribution for a SIMPLE plan participant in 2026 is $17,000 with a $4,000 catch-up allowed for employees age 50+. The “super catch-up” contribution for SIMPLE plans in 2026 is $5,250, allowing employees age 60-63 to make a total contribution of $22,250.

Employer contributions to a SIMPLE plan can be either a percentage of employee pay (at least 2%) or a match equal to the employee’s contributions up to a limit of 3% of the employee’s compensation for the year.

For more information about SIMPLE plans, see this IRS webpage.

For more information about employer-sponsored retirement plans, see IRS Publication 560, Retirement Plans for Small Business.

Individual Retirement Accounts (IRAs)

If you don’t have access to a workplace retirement plan, you can contribute to an IRA. If you are covered by an employer-sponsored retirement plan, you may be able to contribute to an IRA. However, you may not be able to fully deduct your IRA contribution, depending on your income.

Just like workplace plans, an IRA also allows both pretax and after-tax contributions, with similar tax treatment. IRA contribution limits are lower than for workplace plans, with a 2026 annual contribution limit of $7,500 with a catch-up of $1,100 for individuals over age 50, allowing for an annual contribution of $8,600. There is no “super catch-up” contribution available for IRAs.

For more information about IRAs, see IRS Publication 590, Individual Retirement Arrangements.

This article provides a broad overview of a complicated topic, so for more information about your particular situation, please contact your investment advisor or tax professional.