Retirement
How does a 401(k) work?
A 401(k) is a US workplace retirement plan. Here is how money gets in, how an employer match adds to it, when that match becomes yours, and the dollar limits the IRS set for tax year 2026.
Retirement
This section covers US retirement accounts — the 401(k) plans offered through employers and the Individual Retirement Arrangements (IRAs) people open on their own.
Also in Retirement
Retirement
What is a target-date fund?
New to Retirement? Read in this order
All Retirement explainers
5 published
Retirement
Traditional vs Roth IRA: what is the difference?
Both are US Individual Retirement Arrangements with the same contribution limit. The difference is timing: a traditional IRA may lower your tax now, a Roth IRA can make qualified withdrawals tax-free later.
Retirement
What are required minimum distributions (RMDs)?
Tax-deferred US retirement accounts cannot grow untaxed forever. From age 73, under the current IRS rules, owners must withdraw a minimum each year — here is how the amount is worked out and what happens if you miss it.
Retirement
What is a target-date fund?
Target-date funds bundle stocks, bonds and other funds into one holding that grows more conservative as a chosen year approaches. They are convenient, but glide paths differ widely between funds, and no fund guarantees an outcome.
Retirement
How do people estimate how much to save for retirement?
There is no single right number. Most estimates chain together three rough steps: a share of pre-retirement income to replace, what Social Security might cover, and a withdrawal rate to turn the gap into a savings figure. Each step rests on assumptions you should see.
Terms used in this section
Glossary A–ZAbout this section
This section covers US retirement accounts — the 401(k) plans offered through employers and the Individual Retirement Arrangements (IRAs) people open on their own. These accounts are created by US tax law, so the rules on who can contribute, how much, and when money must come out come from federal tax law, are administered by the Internal Revenue Service (IRS), and several dollar limits are adjusted from year to year. When we quote a contribution limit, age or income threshold, we name the tax year it applies to and link to the IRS page we read it on. If you live outside the United States, the ideas — tax-deferred growth, employer matching, gradually shifting from stocks to bonds — may be familiar, but the specific accounts and numbers here do not apply to you.
Start with the mechanics before the decisions. Learn how a 401(k) and an employer match work, how Traditional and Roth accounts differ in when you pay tax, and why the government eventually requires withdrawals from most tax-deferred accounts. Then look at target-date funds, a common default investment inside workplace plans, and at the rules of thumb people use to estimate a savings goal — including why those rules are debated. Nothing here is personal tax advice; for your own situation, the IRS pages we cite and a qualified tax professional are the places to confirm details.