8 Alternatives to a 401(k) Plan for Retirement Savers

Retirement savers have a variety of options when it comes to saving for retirement. IRAs, such as 401(k)s, offer tax advantages for those saving for retirement. If you qualify for the Roth option, consider your current and future tax situation to decide between a traditional IRA and a Roth IRA. Other alternatives include health savings accounts (HSAs), traditional IRAs, and taxable investments.

Each option has its own advantages and disadvantages, so it's important to understand the differences before making a decision. A traditional 401(k) plan is a tax-advantaged vehicle designed to allow employees to save for retirement. Contributions are deferred before taxes, reducing the employee's taxable income, and funds grow tax-deferred until retirement. About 50 percent of employers offer a return on contributions, according to data from the Bureau of Labor Statistics.

If your employer doesn't offer a 401(k) plan or a good one, you have other options. A traditional IRA is one of the most popular ways a person can save for retirement, regardless of the other retirement plans they have. The traditional IRA allows an employee to keep money in an account that allows the money to grow tax-deferred. You'll pay taxes only when you withdraw the money when you retire.

In addition, you may be able to deduct account contributions from your taxable income, so you can avoid paying taxes on that income today. The Roth IRA allows you to increase your money tax-free and you can withdraw any part of the money when you retire completely tax-free. In exchange for this benefit, your contributions are made after taxes. In other words, you don't get any tax savings today with the Roth IRA. Health savings accounts (HSAs) aren't just for health care, they were created to help Americans with high-deductible health plans pay for their care. The HSA does not have a required minimum distribution.

In most plans, investment options are available for contributions to the HSA once a balance is reached. If you continue to work after age 65, the funds can be used to pay for employer-sponsored health insurance. After retirement, funds can be used to pay premiums for Medicare or Medicare Advantage plans. Taxable investments are another option for retirement savers who don't have access to a 401(k) plan or other tax-advantaged accounts. Taxable investments include stocks, bonds, mutual funds, ETFs, and other investments that are not held in a tax-advantaged account.

These investments are subject to capital gains taxes when sold at a profit. Which 401(k) alternative is right for you depends on your retirement schedule, how much you can invest annually, and your risk tolerance. Choose a savings plan that aligns with those factors and you'll be on your way to building wealth for retirement. If you're young and confident that you'll earn more and be in a higher tax bracket in the future, the Roth 401(k) may be a good option. But even if you're in your 40s, 50s, or 60s, you might want to take a closer look at the Roth option. Health savings accounts have a huge advantage over a 401(k).

Potentially, you can get twice as much tax relief as a 401 plan offers.