Best Retirement Plans for March 2025

Financial experts all agree that the sooner you start saving, the better. Retirement savings accounts offer long-term wealth-building features like compounding, tax advantages, and retirement-focused investment strategies. But how much you need to save depends on personal factors.

Compound interest allows you to earn interest on your interest. The longer your money grows, the faster it accumulates and the closer you are to achieving a financially secure retirement.

Contributing a little here and there is better than not contributing at all.

Business Insider’s editors’ top picks for the best retirement plans to grow your nest egg in 2025. 

Open a New Retirement Account

Best Retirement Plans for Employees

Explore the best retirement plans for employees of for-profit companies, public school employees, federal service employees, and more

401(k) Plans

One of for-profits’ most popular retirement savings plans is the 401(k) plan. You can defer your taxable income with a traditional 401(k) plan or get tax-free growth and withdrawals with a Roth 401(k) plan.

In 2025, you can contribute up to $23,500 if you’re under 50. Older employees can also contribute up to $7,500 in catch-up contributions.

In 2024, the 401(k) contribution limit for employees younger than 50 is $23,000. Those 50 and older can contribute an additional “catch-up” contribution of $7,500.

Many 401(k) plans offer employer-matching contributions. Your employer matches up to a certain limit for every dollar you put into your account, which is generally considered “free money” toward your retirement. 

For instance, if you make $50,000 annually, and your company matches 50% of your 401(k) contributions up to 5% of your salary, you would need to contribute $2,500 into your account to receive the full match amount. Your employer would then contribute an additional $1,250 a year.

Pros:

• Automatic payroll deductions
• Tax-deferred growth or tax-free withdrawals
• Employer-match benefits

Cons:

• Investment options are limited to employer plan
• Typically high fees (if not paid by employer)

Check out the average 401(k) balance by age>>

403(b) Plans

Tax-sheltered annuities, commonly refered to as 403(b)s, are retirement plans for public school employees, tax-exempt organizations, churches, and other nonprofit companies. Similar to a 401(k), 403(b)s may offer the benefit of an employer match. You can contribute pre-tax or after-tax money. 

If you’re under 50, you can contribute up to $23,5000 in 2025 (up to $23,000 in 2024).

Employees 50 and up can contribute an additional $7,500. In addition to pre-tax and after-tax contributions, you can contribute to your 403(b) by allowing your employer to withhold money from your paycheck to deposit into the account.

Pros:

• Automatic payroll deductions
• Tax-deferred growth or tax-free withdrawals
• Employer match benefits

Cons:

• Investment options are limited to employer plan

Check out our guide to investing after retirement>>

Thrift Savings Plans

Thrift savings plans (TSPs) are retirement accounts for federal and uniformed services employees. TSPs let you contribute pre- or after-tax dollars. Your employer can match your retirement contributions up to 5% of your salary.

The limit is $23,500 in 2025, and the catch-up contribution limit is $7,500. Beginning January 1, those aged 60, 61, 62, and 63 are eligible for a higher contribution limit of up to $11,250.

The annual contribution limit for 2024 is $23,000. The catch-up contribution limit is $7,500.

Pros:

• Up to a 5% employer match
• Higher contribution limit of up to $11,250 for those 60-63
• Low investment fees

Cons:

• Must be a government or military employee to qualify
• Strict rules for early withdrawals and loans

Check out how much you need to save for retirement>>

457(b)s

A 457(b) is a retirement savings account offered by state and local governments and tax-exempt organizations. You can contribute to your 457(b) plan by asking your employer to withhold a portion of your paycheck and deposit it in your retirement plan. Some employers allow you to make Roth contributions. 

Since 457(b)s are supplemental savings plans, you can make early withdrawals before 59 ½ without being subjected to a 10% penalty.

In 2025, the annual contribution limit is $23,500, with a catch-up contribution limit of $7,500 for those 50 and older. Starting January 1, folks aged 60-63 are also eligible for higher catch-ups of up to $11,250.

The annual contribution limit for 2024 is $23,000. The catch-up contribution limit is $7,500. Folks 50 and older can contribute up to the annual additions limit, currently $69,000.

Pros:

• Catch-up savings provisions available for older employees
• Tax-deferred income and tax-free growth

Cons:

• Must be an employee of the state or local governments and tax-exempt organizations
• Typically does not offer an employer match

Pension Plans

Pension plans are retirement plans fully funded by your employer, who are required to make regular contributions toward your retirement. However, depending on the plan’s terms, you may not have control over how the money is invested. 

There are two main types of pension plans: defined contribution plans and defined benefit plans. A 401(k) is technically considered a defined-contribution pension plan, and your employer is not responsible if your investments perform poorly.

Traditional pension plans are defined benefit plans (plans with fixed, pre-established benefits). Employers must provide retirement funds for a certain dollar amount, calculated based on employee earnings and employment years.

Pros:

• Guaranteed income for the rest of your life, regardless of investment performance
• Typically, the employer makes contributions to the pension plan

Cons:

• No control over how funds are invested
• Run the risk of your company going bankrupt and not being able to pay your benefits
• You can’t access your pension until you retire

Best Retirement Plans for Self-Employed Individuals

Solo 401(k)

Solo 401(k)s are an option for business owners who work for themselves and have no employees. They can contribute as both an employer and employee (and spouses of business owners may be able to contribute as well), meaning they can contribute twice as much. You can make pre- or post-tax (Roth) contributions to your account. 

As an employee, you can defer up to $23,000 of your self-employed income in 2024. If you’re 50 or older, you can make an additional $7,500 catch-up contribution.

In 2025, you can defer up to $23,500 of your income with a $7,500 catch-up contribution and a higher catch-up (for those 60-63) of $11,250.

For both 2024 and 2025, you can contribute up to 25% of compensation after tax as an employer.

Pros:

• Contribute both as an employee and employer
• Higher-catch up contribution limit of $11,250 for those 60 to 63
• Tax-deferred income or tax-free withdrawals
• Spouses can be added to a solo 401(k) plan

Cons:

• Must be a business owner or spouse of a business owner to qualify
• Must make regular contributions for an account to remain active

SEP IRA

Simplified employee pension (SEP) IRAs are retirement vehicles managed by small businesses or self-employed individuals.

According to the IRS, employees (including self-employed individuals) are eligible if they are 21 years old, have worked for the employer for at least three of the last five years, and have made a minimum of $750. 

SEP IRAs also require that all contributions to the plan are 100% vested. This means that each employee holds immediate and complete ownership over all contributions to their account, including any employer match.

You can contribute up to $69,000 or 25% of your compensation in 2024, whichever is less. For 2025, the contribution limit is $70,000 or 25% of your compensation, whichever is less.

Vesting protects employees against financial loss. For instance, according to the IRS, an employer can forfeit amounts of an employee’s account balance that isn’t fully vested if that employee hasn’t worked more than 500 hours in a year for five years.

Pros:

• Employers must make equal contributions to all eligible employees
• Immediately vested
• Tax-deferred income or tax-free withdrawals

Cons:

• Only employer contributions are allowed
• Employers must make equal contributions to all eligible employees

SIMPLE IRA

SIMPLE IRAs are for self-employed individuals or small businesses with 100 employees or less. According to the IRS, these retirement plans require employers to match each employee’s contributions on a dollar-for-dollar basis up to 3% of the employee’s salary.

To qualify, employees (and self-employed individuals) must have made at least $5,000 in the last two years and expect to receive that amount during the current year.

But once you meet this requirement, you’ll be 100% vested in all your SIMPLE IRA’s earnings, meaning you have immediate ownership over your and your employer’s contributions. 

Employees can contribute up to $16,000 in 2024. You can also add a catch-up contribution of $3,500 if you’re 50 or older.

Employees can contribute up to $16,500 in 2025. You can also add a catch-up contribution of $3,500 if you’re 50 or older. Those 60-63 can contribute higher catch-ups of up to $5,250.

Pros:

• Tax-deferred income or tax-free withdrawals
• Employer match benefits (up to 3%)
• Immediate vesting

Cons:

• Doesn’t allow loans
• Don’t offer the same level of creditor protection against bankruptcy as traditional IRAs

Payroll Deduction IRAs

Small businesses and self-employed people can set up employee IRAs even simpler. With payroll deduction IRAs, businesses delegate most of the hard work to banks, insurance companies, and other financial institutions.

After determining which institutions their employer has partnered with, employees can set up payroll deductions to fund their IRAs with those institutions.

These accounts are generally best for employees who don’t have access to other employer-sponsored retirement plans, such as 401(k)s and 457(b)s.

For 2024 and 2025, you can contribute up to $7,000 in annual contributions and up to $1,000 in annual catch-up contributions for employees aged 50 or older. 

Pros:

• Automatic payroll deductions
• Tax-deferred income or tax-free withdrawals
• Greater control over how funds are invested

Cons:

• Lower contribution limit compared to other retirement plan options
• No employer match benefits

Best Individual Retirement Arrangements (IRAs)

One of the most appealing components of independent retirement plans like IRAs is that you can open one as long as you have taxable (earned) income.

Even if you have an employer-sponsored retirement account, you can usually set up a Roth IRA or traditional IRA or other independent retirement account.

Traditional IRA

Traditional IRAs let you save with pre-tax contributions toward your retirement savings. You’ll pay tax when you withdraw during retirement. Traditional IRAs are recommended for higher-income workers who prefer to receive a tax deduction benefit now rather than later.

The 2024 and 2025 contribution limit is $7,000, with up to $1,000 in catch-up contributions.

Pros:

• Low-cost investment options and asset management
• Tax-deferred income
• Accessible to anyone with an income

Cons:

• Low contribution limit compared to other retirement plan options

Roth IRA

Roth IRAs are funded by after-tax dollars, meaning you pay taxes on your contributions now and make tax-free withdrawals later. As long as you’re eligible, experts recommend Roth IRAs for early-career workers who expect to be in a higher tax bracket when they withdraw.

Traditional and Roth IRAs share the same contribution limits: $7,000 in 2024 and 2025, with up to $1,000 in catch-up contributions.

If you want to open one of the best Roth IRA accounts, single filers can only contribute the maximum amount in 2024 if their modified adjusted gross income (MAGI) is less than $146,000. To be eligible for a partial contribution, your income must be under $161,000.

Married couples must earn less than $240,000 annually to contribute the full amount in 2024. You can still contribute less if you earn a little more, though. 

MAGI’s limit for 2025 is $165,000 for a full contribution and $150,000 for a partial contribution. Married couples can contribute if their joint income is $236,000 through $246,000.

You can find your MAGI by calculating your gross (before tax) income, subtracting any tax deductions from that amount to get your adjusted gross income (AGI), and adding back certain allowable deductions.

Pros:

• Accessible to anyone with an income
• Low-cost investment options and management
• Tax-free growth and withdrawals

Cons:

• You can only contribute up to the full contribution amount of your MAGI is below $146,000
• Lower contribution limit compared to other retirement plans

Spousal IRAs

There’s also an option for married couples where one spouse doesn’t earn taxable income. Spousal IRAs allow both spouses to contribute to a separate IRA as long as one spouse is employed and earns taxable income. This account allows the nonworking spouse to fund their own IRA. 

In 2024 and 2025, each can contribute $7,000 (or $8,000 if they are 50 or older) for up to $16,000 annually.

Pros:

• Allows spouses to contribute, doubling a couple’s IRA contributions
• Tax-deferred income or tax-free growth
• Access to the Retirement Savings Contribution Credit (Saver’s Credit)

Cons:

• Contributions based on your spouse’s earned income, not your own
• Must file a joint tax return
• Lower contribution limit than other retirement plans

Rollover IRAs

The best rollover IRAs let you convert your existing employer-sponsored retirement plan into an IRA.

Experts generally recommend that you roll over your 401(k) assets into a new IRA for a few reasons: primarily because you have more control over the investment options in an IRA than in a 401(k), and it’s easier to consolidate your accounts for record-keeping.

Many online brokerages and financial institutions offer 401(k) rollovers; some will even pay you to transfer your employer-sponsored plan to an IRA.

Pros:

• Lower investment and management fees
• Simply process with typically no-transfer fee
• Greater investment options

Cons:

• Unvested funds can’t be rolled over
• You may incur a penalty from the IRS if you don’t rollover funds within 60 days you distribute old 401(k) funds
• Lower contribution limits compared to 401(k) plan

Self-Directed IRAs (SDIRAs)

You can fund a self-directed IRA using traditional or Roth contributions ($7,000 and contribution limits in 2024, plus another $1,000 for catch-up contributions). But the difference between these accounts is mainly one of account custody and investment choices.

Unlike traditional and Roth IRAs, the IRS requires that all SDIRAs have a certified custodian or trustee who manages the account. These third parties handle the setup process and administrative duties of the IRA (e.g., executing transactions and assisting with account maintenance).

SDIRAs also give investors access to a wider range of investment options. With traditional and Roth IRAs, you’re limited to mutual funds, ETFs, stocks, and other conventional investments. But, SDIRAs allow you to invest in alternative assets like real estate, precious metals, and cryptocurrencies.

Pros:

• Flexible investment options, including alternative investments like gold and cryptocurrencies
• Tax breaks on assets like real estate properties, so you won’t owe taxes on the rental income as long as it is in the IRA
• Lower contribution limit compared to other retirement plans

Cons:

• Potential for regulatory compliance issues
• Higher potential for fraud
• No professional guidance

Nondeductible IRAs

Nondeductible IRAs are for people who earn too much to get the full tax benefits of an IRA. Contributions for these accounts aren’t tax deductible, meaning you’ll fund your IRA with post-tax dollars like a Roth IRA. The difference is that you’ll still have to pay taxes on any earnings or interest from the account once you withdraw at age 59 1/2.

Pros:

• Allows you to contribute more to retirement if you are unable to because of higher income
• Same contribution limit as regular IRAs, including catch-ups

Cons:

• You must still pay taxes on earnings

Other Retirement Savings Options

Annuities

Annuities are investment vehicles purchased from insurance companies at a premium. You’ll receive periodic payouts during retirement once you purchase an annuity using pre-tax or after-tax dollars. Annuities offer a reliable income stream for retirees and reassurance they won’t outlive their savings. 

The funds in an annuity can also be invested. The investment gains grow tax-free before you start receiving payouts, but you’ll still be liable to pay income tax. Plus, annuities have limited liquidity and high fees that may diminish potential gains. 

Pros:

• Offer a reliable income stream for a fixed period or even the rest of someone’s life
• Tax-deferred growth
• Low risk and decreased market volatility

Cons:

• High fees
• Annuity payouts incur income tax
• Limited liquidity

Health Savings Accounts (HSAs)

Health Savings Accounts (HSAs) are savings accounts designed to cover medical expenses but can double as retirement savings. Once you’re 65, you can withdraw the funds from your HSA penalty-free for non-medical expenses. 

While an HSA isn’t a great main retirement savings vehicle, it can be a great addition to a different long-term savings account. In addition to penalty-free withdrawals on qualifying expenses, HSAs are funded with pre-tax dollars and grow-tax-free. But you’ll still be subject to income tax. 

In 2024, you can contribute up to $4,150 for self-coverage and $8,300 for family coverage. Folks 55 and older can contribute an additional $1,000 catch-up contribution. 

In 2025, you can contribute up to $4,300 for self-coverage and $8,550 for family coverage. Folks 55 and older can contribute an additional $1,000 catch-up contribution.

Pros:

• Funds can be used penalty-free for healthcare costs not covered by your health plan
• Lowers your taxable income
• It can be carried over from one job into the next and even into your retirement

Cons:

• You must have a high-deductible health plan to open a HSA
• You will be charged a 20% tax if funds are used for nonqualified expenses

Choosing the Best Retirement Plan for You

If you’re not a small-business owner or self-employed, the best retirement plan for you usually depends on your type of employer, marital status, and short- and long-term savings goals. 

However, for most employer-sponsored retirement accounts, you can decide whether to make pre-tax or post-tax (Roth) contributions to your account.

Roth contributions are best for those who expect to pay more in taxes as they age, but you should consider pre-tax contributions if you don’t mind paying taxes when you withdraw money from your account in retirement.

You can boost your retirement savings even more by opening a separate IRA in addition to your employer-sponsored plan (you can still save toward retirement with an IRA if you’re unemployed).

FAQs About Retirement Plans

Why You Should Trust Us: Our Expert Panel For The Best Retirement Plans

Rebecca Zissar/Business insider

 We interviewed the following investing experts to see what they had to say about retirement savings plans. 

• Sandra Cho, RIA, wealth manager, and CEO of Pointwealth Capital Management
• Tessa Campbell, Investment and retirement reporter at Personal Finance Insider

What are the advantages/disadvantages of investing in a retirement plan?

Sandra Cho:

“The main advantage is the tax implications of the account. Depending on the account, taxes will either be deferred or not included at all. For employer-sponsored retirement plans like 401(k)s, contributions to the plan are made with pre-tax funds, and the account grows tax-deferred. Taxes are then owed upon withdrawal.

“Roth IRAs, on the other hand, are contributed to with post-tax funds but grow tax-free. Both should be included in an investor’s portfolio. Another advantage is that 401(k)s often have an employer matching component. That is, an employer will match your contributions up to a certain point (usually around 3% of your salary). 

“The disadvantage is that retirement accounts have a max contribution limit. Another disadvantage is that these funds cannot be used until age 59 1/2. For younger investors, that can be a long time wait.”

Tessa Campbell: 

“Tax benefits and compound interest are two of the major advantages of contribution to a retirement savings plan like a 401(k) or individual IRA. Depending on the kind of plan you open (traditional or Roth), you can benefit from contributions after- or post-tax dollars. In addition, some 401(k) plans are eligible for employer-sponsored matches, which are essentially free money.

“The disadvantage of a retirement plan is that you won’t be able to access the funds in your account penalty-free until you’re at least 59 1/2 years old. Unless there are no other options, early withdraws from a retirement savings plan isn’t advised.”

Who should consider opening a retirement plan?

Sandra Cho:

“Every individual should be investing through a retirement plan if they have the financial capability to. At the minimum, investors should try to contribute up to the matching amount for their 401(k) and the maximum amount for their Roth IRA. The growth in these funds compounds over time, helping to enhance the long-term return.”

Tessa Campbell:

“I can’t think of a single person that wouldn’t benefit from a retirement savings plan, other than maybe someone that is already well into retirement. Although some younger individuals don’t feel the need to start contributing quite yet, it’s actually better to open an account as soon as possible and take advantage of compound interest growth capabilities.”

Is there any advice you’d offer someone who’s considering opening a retirement plan?

Sandra Cho:

“I would advise them to work with a financial advisor or trusted professional. This will give them insight into where they should be investing their money, whether that be a 401(k), Roth IRA, or another vehicle. There are plenty of people and sources out there who provide important information and can help you create a strong financial future.”

Tessa Campbell:

“Don’t contribute huge portions of your salary if it doesn’t make sense with your budget. While contributing to a retirement savings plan is important, you must still afford your monthly expenses and pay down an existing debt. If you’re having trouble establishing a reasonable budget, consult a financial advisor or planner for professional help.”

Tessa Campbell

Investing and Retirement Reporter

Tessa Campbell is an investing and retirement reporter on Business Insider’s personal finance desk. Over two years of personal finance reporting, Tessa has built expertise on a range of financial topics, from the best credit cards to the best retirement savings accounts.ExperienceTessa currently reports on all things investing — deep-diving into complex financial topics,  shedding light on lesser-known investment avenues, and uncovering ways readers can work the system to their advantage.As a personal finance expert in her 20s, Tessa is acutely aware of the impacts time and uncertainty have on your investment decisions. While she curates Business Insider’s guide on the best investment apps, she believes that your financial portfolio does not have to be perfect, it just has to exist. A small investment is better than nothing, and the mistakes you make along the way are a necessary part of the learning process.Expertise: Tessa’s expertise includes:

• Credit cards
• Investing apps
• Retirement savings
• Cryptocurrency
• The stock market
• Retail investing

Education: Tessa graduated from Susquehanna University with a creative writing degree and a psychology minor.When she’s not digging into a financial topic, you’ll find Tessa waist-deep in her second cup of coffee. She currently drinks Kitty Town coffee, which blends her love of coffee with her love for her two cats: Keekee and Dumpling. It was a targeted advertisement, and it worked.

Read more
Read less