How to save for retirement if your company doesn't offer a 401(k) (2024)

Even if your employer doesn't offer a 401(k) plan, it shouldn't stop you from getting the most out of your retirement savings.

You have other tax-advantaged options available to save for the future, including individual retirement accounts, Roth IRAs or health savings accounts — all of which can help your money grow.These accounts also offer tax benefits, allowing you to maximize returns.

The only catch is that these accounts may have eligibility limits related to income, as well as annual contribution limits that aren't as high as 401(k)s, which allow a single person to contribute up to $23,000 in 2024. However, only about 11% of Americans max out their 401(k) contributions.

Offered by banks and brokerages, traditional IRAs are a good alternative to 401(k)s in that your contributions are tax deductible and there are no predetermined income limits on whether you can contribute to an account.

However, there are limits on contributions across all of your IRA accounts. In 2024, individuals under 50 can contribute up to $7,000. An annual $1,000 catch-up contribution is available to those 50 and older.

If you don't have an employer retirement plan like a 401(k), all of those contributions are tax deductible. But here's a twist: If your spouse has a 401(k), the tax deductibility of your annual contributions phases out between modified adjusted gross income of $230,000 and $240,000 for married couples filing jointly in 2024.

"If your employer doesn't offer a 401(k) plan, you can contribute to a traditional IRA and take a tax deduction in most cases," says Justin Rucci, a certified financial planner in Newport Beach, California. "The contribution limit is lower than a 401(k), but it is still a way to get tax-advantaged dollars for retirement."

With IRAs, you can start withdrawing funds without a 10% penalty after reaching age 59½. You also must take minimum distributions — basically mandatory withdrawals — at the age of 73.

Like 401(k)s, IRA withdrawals are taxed as ordinary income at the time of withdrawal. The advantage to tax-deferred accounts like 401(k)s and IRAs is that you get immediate tax relief by deducting contributions every year. Another benefit is that you might be in a lower income bracket when you retire, which would maximize your tax savings.

Roth IRAs are the opposite of traditional IRAs in that you pay taxes on contributions up front. The contribution limits are the same as traditional IRAs, but all future withdrawals are tax-free, which is great if you expect tax rates to increase by the time you retire.

Another bonus is that contributions — as opposed to total earnings — can be withdrawn at any time without a penalty. And unlike traditional IRAs, you don't have to take minimum distributions at any point.

"The real advantage of a Roth IRA lies in its tax-free growth and withdrawals in retirement," says Alyson Basso, a certified financial planner in Middleton, Massachusetts. The lack of mandatory minimum distributions also offers "flexibility in retirement planning and potential estate planning benefits," she says.

The downside to Roth IRAs is that they come with income restrictions. For 2024, your allowable contributions will phase out down to $0 based on modified adjusted gross income between:

• $146,000 and $161,000 for single filers
• $230,000 and $240,000 for married couples filing jointly
• $0 to $10,000 for married filing separately, if you lived together at any point in the year (otherwise you are treated as a single filer)

Provided that you don't disqualify yourself from contributing to a Roth IRA by making too much money, they offer more flexibility than a traditional IRA in terms of withdrawals.

Health savings accounts are offered by many employers and banks, providing a tax-deferred way to save for medical expenses. But they're a good way to save for retirement, too.

That's because the funds are typically investable and grow tax-free with no mandatory withdrawals.

To be eligible, you must be enrolled in a high-deductible health plan, which for 2024 requires a minimum deductible of $1,600 for individuals or $3,200 for families.

Contributions are made pre-tax and are also tax deductible. However, the contribution limits are less than other accounts discussed: up to $4,150 for individuals and up to $8,300 for families, for 2024. Yearly catch-up contributions of $1,000 are allowed for single people or each person in a family who is 55 or older.

Withdrawals for qualified health expenses, like dental care or prescriptions, are tax-free, while other withdrawals are subject to income taxes and a 20% penalty before age 65.

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