In 2025, 70% of private industry workers in the U.S. had access to a defined contribution plan, such as a 401(k) plan. Source: U.S. Department of Labor, 2025 Employer-Sponsored Retirement Plans Employer-sponsored retirement plans such as Section 401(k), 403(b), and 457 plans offer higher contribution limits than IRAs. In 2026, you can contribute up to $24,500 plus an additional $8,000 if you are age 50 to 59 or 64 or older. If you reach age 60 to 63 in 2026, your additional contribution limit is $11,250.* You generally contribute a percentage of your salary using pre-tax funds (or after-tax funds to a Roth account), and you won’t be subject to taxes on any pre-tax contributions or earnings until you take withdrawals in retirement. Employers may offer to match a percentage of your employer-plan contributions with additional funds. Distributions from tax-deferred employer-sponsored retirement plans are taxed as ordinary income. (Qualified Roth employer plan distributions are tax-free.**) Withdrawals taken prior to reaching age 59½ may be subject to a 10% federal tax penalty, unless an exception applies. Generally, required minimum distributions (RMDs) from traditional, pre-tax employer-sponsored plan accounts must begin after you reach age 73 (75 for those who reach age 73 after December 31, 2032). *Catch-up contributions for those earning more than $150,000 in 2026 are required to be after-tax Roth contributions. **Qualified Roth distributions are those made after a five-year holding period and the participant reaches age 591/2, becomes disables, or dies.
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