Contributions may be tax deductible on your federal income tax return if neither you nor your spouse are covered by a 401(k) plan or another employer-sponsored plan. If you or your spouse are covered by a retirement plan, deductibility depends on your income.  

You can make a non-deductible IRA contribution regardless of your income. 

Contributions that are rolled over from a 401(k) to a traditional IRA can be made on a pretax or an after-tax basis. 

Contributions must be made on an after-tax basis. 

Roth IRA contributions are not tax deductible.  

Withdrawals of deductible contributions and earnings are taxed as ordinary income. 

Withdrawals are tax-free, provided certain conditions are met. 

There is no age limit, though you must have earned income. 

There is no age limit, though you must have earned income. 

There are no income limits to contribute to a traditional IRA.  

However, if you or your spouse are covered by a retirement plan at work, your ability to deduct your contributions depends on your modified adjusted gross income (MAGI) and your income tax filing status.  

There are income limits to contribute to a Roth IRA. 

However, some 401(k) plans may offer a Roth 401(k) option. Or for those above the income limits, an after-tax contribution to a traditional IRA or 401(k) and subsequent Roth conversion (known as a backdoor Roth conversion) may be an alternative solution. 

Yes.¹ 

No. 

For the 2025 tax year, the total contribution limit for individuals under age 50 is $7,000 and $8,000 for those age 50+.*  

For the 2025 tax year, the total contribution limit for individuals under age 50 is $7,000 and $8,000 for those age 50+.* 

Employees who:

• Are aged 21+.
• Have worked for the business in at least three of the last five years.
• Have received at least $750 in compensation in the current year.

An employer can choose to have less restrictive eligibility requirements.

Employees who:

• Earned at least $5,000 of compensation in any two previous years of service.
• Anticipate earning at least $5,000 in the current year.

An employer can choose to have less restrictive eligibility requirements.

For 2025, you can contribute up to $16,500 if you are under age 50 or $20,000 if you are age 50+. 

Individuals who are ages 60-63 have an additional catch-up for a total of $21,750.

You may be able to contribute $17,600 for the regular limit and $21,450 including the age 50+ catch-up limit if your employer has 25 or fewer employees or makes certain employer contributions. Individuals who are ages 60-63 may be able to contribute up to $22,850 under this exception. 

All eligible employees automatically benefit. 

 
You generally cannot make contributions from your salary, as a SEP is an employer-funded plan. Only “SAR-SEP” plans adopted prior to 1997 may allow for salary deferrals. 

 
You must select beneficiaries and choose the investments. Immediate vesting. 

 
Employer contributions are discretionary.

Yes. You must be employed by an organization that offers a 401(k). 

No. You can open a traditional or Roth IRA through any broker. 

You typically must be at least 21 years old to contribute to a 401(k), with at least one year of service (working at least 1,000 hours) with your company. Employees who have worked at least 500 hours in the previous two years must also be allowed to participate. 

There are no age limits on who can contribute to an IRA, but you must have earned income to contribute. 

Some employers may match employee contributions to a 401(k). 

Traditional and Roth IRAs do not offer matching contributions from an employer. 

401(k) contributions generally do not have income limits (although some highly compensated employees may have their contribution amounts reduced). 

Traditional IRAs have income limits for deductibility (if you or your spouse have a plan at work).  

Roth IRAs have income limits for contributions. 

For 2025, the maximum individual contribution for both Roth and traditional IRAs is $7,000 for those under age 50 and $8,000 for those age 50+.