If my employer has a retirement program that is *not* a 401(k), should I/can I invest in one of my own?

Asked by: Jim Swanson

What is a better investment than a 401k?

Good alternatives to a 401(k) are traditional and Roth IRAs and health savings accounts (HSAs). A non-retirement investment account can offer higher earnings, but your risk may be higher, too.

What is one key advantage to an employer-sponsored retirement plan?

Employer-sponsored retirement plans help fill the financial knowledge gap and offer workers a means to improve their financial wellness. Specifically, contribution matching and automatic payroll deductions make it easier for employees to save.

Can I contribute to an IRA if I don’t have a 401k?

In 2021, the contribution limit for a traditional IRA is $6,000 or $7,000 if you’re 50 or older. And, if you or a spouse don’t have a 401(k) through work, some contributions you make to a traditional IRA are deductible, depending on other aspects of your finances.

Can you retire without 401k?

But even if you find yourself without a 401(k) option or a plan without an employer match, don’t panic! You still have plenty of options available to help you invest 15% of your gross income into retirement savings, which is what we recommend. You can still reach your retirement goals.

How do I save for retirement if my employer doesn’t offer 401k?

Key Takeaways

  1. If your company doesn’t offer a 401(k), you still can save for the future.
  2. Individual retirement accounts (traditional and Roth IRAs) let you put away up to $6,000 a year for retirement purposes.
  3. Your options may include encouraging the company bosses to adopt a retirement plan.

How do I invest if my employer doesn’t offer 401k?

What to Do if Your Job Doesn’t Offer a 401(k)

  1. An individual retirement account (IRA) Unlike 401(k)s, IRAs aren’t tied to your employer. …
  2. A taxable investment account. …
  3. More options if you’re a freelancer or entrepreneur.

How do employer-sponsored retirement plans work?

Employer-sponsored savings plans such as 401(k) and Roth 401(k) plans provide employees with an automatic way to save for their retirement while benefiting from tax breaks. The reward to employees who participate in these programs is they essentially receive free money when their employers offer matching contributions.

What are the two types of employer-sponsored retirement plans?

The Employee Retirement Income Security Act (ERISA) covers two types of retirement plans: defined benefit plans and defined contribution plans.