Accumulating assets for retirement involves selecting from a range of account types, each offering unique advantages to help you grow your nest egg. The best options for you will depend on your employment status, income, and retirement goals. Among the most popular choices are 401(k) plans, Individual Retirement Accounts (IRAs), and annuities.
A 401(k) plan is one of the most common workplace retirement accounts. Contributions are made with pre-tax income, allowing your investments to grow tax-deferred until you withdraw them in retirement. Your company may also offer Roth 401(k), in which you pay taxes now on your contributions, which can be withdrawn tax-free at retirement. Many employers offer matching contributions up to a certain percentage of your salary, providing an immediate boost to your savings. However, employer contributions may be subject to vesting requirements, so it’s important to understand your plan’s terms. Withdrawals before age 59½ typically incur income tax and a 10% penalty, with certain exceptions.. Despite some restrictions, maximizing your 401(k) contributions is generally recommended due to the tax benefits and potential employer matches.
For 2025, the 401(k) plan limits are:

• For individuals under age 50, $23,500
• For individuals over age 50, $31,000 ($23,500 regular deferral plus $7,500 “catch-up contribution”)
• For individuals aged 60-63, $34,750 ($23,500 regular deferral plus $11,250 “super catch-up contribution”)

Self-employed individuals with no W-2 employees can establish a “solo 401(k)” plan. With this type of plan, an individual is treated as both an employee and employer.

Under this type of plan, the following contribution limits for 2025 apply:

• For individuals under age 50, the maximum combined employee and employer contribution is $70,000
• For individuals over 50, the maximum combined employee and employer contribution is $77,500
• For individuals aged 60-63, the maximum combined employee and employer contribution is $81,250.

IRAs are another valuable tool for retirement savings, especially for those who are self-employed or do not have access to a workplace plan. You can open an IRA independently through banks, investment firms, or online brokerages, and you have control over your investment choices. The two main types are traditional and Roth IRAs. Traditional IRAs are funded with pre-tax dollars, allowing your contributions to grow tax-deferred, with taxes paid upon withdrawal in retirement. Roth IRAs, on the other hand, are funded with after-tax dollars, so qualified withdrawals in retirement are tax-free. For 2025, the contribution limit is $7,000, or $8,000 if you are age 50 or older. Early withdrawals from pre-tax IRA before age 59½ generally incur taxes and a 10% penalty with certain exceptions, and traditional IRAs require minimum distributions starting at age 73. Withdrawals from Roth IRA can be made at any time, but the tax implications vary based on age and whether you are withdrawing contributions or earnings. Generally, you can withdraw your contributions tax-free and penalty free at any time. However, withdrawing earnings before age 59 ½ or before the account is five years old may result in taxes and penalties. There are special rules for contributing to an IRA if you also participate in a plan such as a 401(k).

Annuities offer another way to secure retirement income. Purchased from insurance companies, annuities can be funded with a lump sum or a series of payments in exchange for a stream of income that begins immediately or at a future date. Like 401(k)s, annuities provide tax-deferred growth, but withdrawals are generally only penalty-free after age 59½. There are three main types: fixed annuities, which guarantee regular payments; variable annuities, where payments fluctuate based on investment performance; and indexed annuities, which are tied to a market index. Annuities often have surrender periods, which can last several years, during which early withdrawals may incur significant fees. They can also be complex and carry higher costs, so it’s important to review the terms carefully before committing.
Choosing the right mix of retirement accounts is crucial for building a solid financial foundation for your future. Each option offers distinct tax advantages, contribution limits, and withdrawal rules, so consider your individual circumstances and consult with a financial advisor to determine the best strategy for your retirement savings

The above material does not constitute accounting, legal, or tax advice, you should consult the appropriate professional to discuss your particular situation.

Signature Financial Advisors, LLC is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Signature Financial Advisors, LLC and its representatives are registered, licensed, or exempted*Registration does not imply a certain level of skill or training*