Salvatore M. Capizzi, CEPA, CBDA, is Dunham’s Chief Sales & Marketing Officer with 45 years of financial-services experience. His commentary has appeared on Bloomberg Radio and Yahoo Finance and in Kiplinger, Financial Advisor magazine, and ThinkAdvisor. A 2026 ThinkAdvisor Luminaries and Wealthies finalist, he writes about retirement planning and advanced tax, trust, and estate strategies.
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There is no single best retirement account. The right choice depends on taxes, employer match, contribution limits, access to funds, and long-term planning flexibility. For most employees, a 401(k) with a strong employer match is the best starting point. From there, Roth accounts and HSAs can add tax diversification and planning options that make a real difference over time.
Key Takeaways
There is no single best retirement account; the right choice depends on the client’s goals and tax situation.
Advisors should compare accounts using five factors: taxes, employer match, contribution limits, access to funds, and future planning flexibility.
For many employees, a 401(k) with a strong employer match is the best place to start.
Roth accounts and HSAs can be powerful tools for tax diversification and long-term planning.
For self-employed clients, solo 401(k)s, SEP IRAs, and SIMPLE IRAs each make sense in different situations.
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9:08
Why Choosing a Retirement Account Isn’t Always Simple
My daughter asked whether she should invest in her employer’s 401(k) plan, and I gave a resounding yes.
"But,” she said, “what if I want that money for a house someday?”
“Then maybe a Roth IRA,” I said. “More flexibility.”
"My company matches 25 percent. And the pre-tax break lets me put in more. Does the Roth still win?”
"Then go with the 401(k),” I said.
“Can I pull from it for the house?”
“Well. No.”
“So, which one, Dad?”
I opened my mouth. Nothing came out.
“By the way,” she said. "What is an HSA?”
I sat there beaten.
I am supposed to be an “expert”. And here was my own daughter, three answers deep, backing me into the corner of my own kitchen.
She was not wrong.
A 401(k) is great until you want a down payment. A Roth IRA is great until you see a 25 percent match. The match is great until you remember you are 28 and a house might be in your future. And then she dropped the HSA on me.
The point is this. There is no best retirement account. There is only the best retirement account for the person asking the question.
How to Choose the Right Retirement Account? Ask These 5 Questions
When you discuss retirement accounts with a client, ask five things.
Can you control the tax bill? Do you pay tax now or pay it later? Pre-tax reduces the bill today. After-tax locks in today's rate and lets the money grow free of future taxation. That single choice can shape the entire plan.
Is there an employer match? A strong match can change the math fast as free money is hard to beat.
How flexible are the contributions? Some clients need room to add more in good years, and others need room to add less when proper planning dictates this.
When might the money be needed, and how hard is it to access? Some accounts make access easy, while others bring rules and penalties that may undermine both the program’s economics and tax strategy.
What doors does this account open later? Think Roth conversions. Charitable giving. Step-up opportunities for non-qualified assets. Good planning creates benefits now and what could be strong options later in life.
If you run each account through those five questions, then the right answer becomes more clear.
When the goal is pure accumulation, three accounts stand out.
Traditional 401(k)
The workhorse. The match is free money, the contribution limit is high, and the pre-tax treatment is meaningful. Hard to argue against leading here when the match is substantial.
Roth 401(k)
Builds tax-free dollars over time. For clients who expect higher tax rates in retirement — or who want to avoid required minimum distributions — the Roth 401(k) deserves serious consideration alongside or instead of the traditional version.
Health Savings Account (HSA)
The most underused account in the tax code. It offers a triple tax advantage: contributions go in pre-tax, growth is tax-free, and withdrawals are tax-free for qualified medical costs. No other account does all three. After age 65, it can also function as a general-purpose retirement account, taxed like a traditional IRA for non-medical withdrawals - but without the same RMD pressure.
One important note: California and New Jersey do not provide the full triple-tax exemption for HSAs, treating them instead as taxable brokerage accounts at the state level.
Retirement Accounts for the Self-Employed Client
Now, business owners and independent contractors face a different set of decisions. These three accounts are available, but again, the “best” plan depends on what you and your client are trying to accomplish.
Solo 401(k)
Allows contributions both as an employee and as the employer, which can produce a higher total contribution than a SEP IRA at the same income level. It allows loans, which can be an important feature. For a self-employed client with no employees other than a spouse, this account can reduce the tax bill significantly while building real retirement assets.
SEP IRA
A simpler alternative. Easy to set up, with contributions up to 25 percent of compensation, or 20 percent of net self-employment income, with a 2026 limit of $72,000. No annual filing required. The trade-off is lower total contribution potential compared to a solo 401(k) at the same income level. Also, you must contribute the same percentage of salary for every eligible employee, which makes it expensive to maintain as the business grows.
SIMPLE IRA
A low-cost plan for small businesses that allows employees to contribute their own salary — unlike a SEP. Employers must provide a mandatory yearly contribution, usually a 3 percent match or a 2 percent flat rate. The 2026 employee contribution limit is $17,000 ($18,100 for firms with 25 or fewer employees).
When a client has side income on top of a W-2 job, the solo 401(k) conversation is one of the highest-value moves an advisor can make. Also, keep in mind that the SECURE Act 2.0 introduced Roth versions of these plans as well.
Accounts for Tax Diversification
Some clients have plenty saved. They just need the right mix.
No one knows what tax rates will look like in twenty years. Spreading dollars across taxable, tax-deferred, and tax-free buckets gives the client choices later. Those choices matter deeply for retirement income planning.
Non-qualified accounts, traditional IRAs and 401(k)s, and Roth IRAs and 401(k)s are all viable tools. The goal is not to maximize one bucket - it is to preserve flexibility across all three.
Two Accounts Advisors Should Not Overlook
The HSA — again
Most clients use it like a checking account for copays. Used correctly, it is one of the strongest long-term investment tools in the tax code. Many advisors treat it as a health spending account. The best advisors treat it as a retirement account that also covers healthcare.
The Spousal IRA
A non-working spouse can still build retirement dollars when there is earned income in the household. Many advisors miss this entirely. It is a quiet opportunity sitting in plain sight.
These are the accounts that can turn a good plan into a great one.
The Case Where the Roth IRA Stands Out
Most of the time, the right answer is context-specific. But one strategy regularly makes the Roth IRA especially compelling
When your client puts a child on the payroll for real work at a fair wage, the business gets a deduction. The child earns income that may be fully tax-free up to the standard deduction. And those wages, up to $7,500 in 2026, can then be placed in a Roth IRA in the child’s name.
You cannot beat the math here.
Tax-free dollars going in the Roth IRA.
Tax-free growth for fifty years or more.
Tax-free dollars coming out in retirement.
Plus, it gives the child the flexibility if they later want to buy that house!
This is the kind of move that turns a good client meeting into a great one.
One paycheck with three wins. And what gets me most excited is the one quiet loss for the IRS.
Conclusion
Clients often ask for the best retirement account because they want a clean answer. Advisors earn their value by giving the accurate one.
The account does not make the plan. The plan makes the account. When you start with taxes, match opportunities, contribution limits, liquidity needs, and long-term planning options, the recommendation becomes clearer and far more useful.
That is the conversation clients remember, and it is the one most likely to lead to better outcomes.
Account
2026 Limit
Tax Benefit
Best For
Watch Out
Traditional 401(k)
Under 50: $24,500 Ages 50–59 and 64+: $32,500 Ages 60–63: $35,750.
Pre-tax contributions; tax-deferred growth
Employees seeking current-year tax deductions and available employer matching
Withdrawals generally taxed as ordinary income; match and vesting vary by plan
Traditional IRA
Under 50: $7,500 Age 50+: $8,600.
Potential tax deduction; tax-deferred growth
Additional retirement savings outside a workplace plan
Deductibility may phase out based on income and workplace-plan coverage
SEP IRA
Up to $72,000 Generally limited to 25% of compensation; self-employed calculations differ.
Generally pre-tax employer contributions
Self-employed clients and business owners seeking simplicity
No employee salary deferrals; generally requires equal contribution percentages for eligible employees
SIMPLE IRA
Standard limits: Under 50: $17,000 Ages 50–59 and 64+: $21,000 Ages 60–63: $22,250.
Generally pre-tax contributions; Roth options may be available
Small businesses offering employee salary deferrals
Required employer contributions; certain plans have higher employee limits—see note below.
Roth 401(k)
Under 50: $24,500 Ages 50–59 and 64+: $32,500 Ages 60–63: $35,750.
*Notes: Contribution limits: Amounts shown are maximums, subject to compensation, eligibility, and applicable plan rules. Catch-up contributions depend on plan availability. The higher catch-up for ages 60–63 replaces—not supplements—the standard age-50 catch-up. SIMPLE IRA exceptions: Certain applicable plans permit a $18,100 base contribution limit in 2026, plus a $3,850 standard catch-up or a $5,250 catch-up for ages 60–63. Employer contribution requirements may differ for plans using these higher limits. Roth catch-up rule: For 2026, affected participants whose 2025 FICA wages from the sponsoring employer exceeded $150,000 generally must make catch-up contributions on a Roth basis.
Frequently Asked Questions About Retirement Account Recommendations
What retirement account should an advisor recommend first? For an employee with an employer match, usually start by reviewing the contributions needed to get the full available match. Consider vesting rules, fees, and the client’s need for cash. Then weigh traditional versus Roth contributions based on their current marginal tax rate and expected tax situation in retirement.
When should an advisor recommend a Roth IRA instead of a traditional 401(k)? A Roth IRA may fit an eligible client in a relatively low tax bracket who wants tax-free qualified withdrawals and access to regular contributions. Still, a valuable employer match may make the 401(k) the better starting point. Keep in mind that Roth IRA earnings and conversions have different withdrawal rules than regular contributions.
What is the best retirement account for a self-employed client? The best fit depends on the client’s business and savings goals. A solo 401(k) often suits an owner-only business seeking employee and employer contributions. A SEP IRA may work for clients who want simple administration. A SIMPLE IRA may suit an eligible small employer that wants employee salary deferrals. Compare employee coverage rules, contribution goals, and administrative costs.
When does an HSA belong in a retirement plan? An HSA belongs in the discussion when a client is eligible and can balance contributions with current healthcare costs and cash needs. Withdrawals for qualified medical expenses are federally tax-free. After age 65, nonmedical withdrawals are taxable but no longer carry the additional 20% tax. That makes an HSA a useful complement to retirement accounts.
Sources
Internal Revenue Service — Retirement Topics — Contributions [irs.gov].
Internal Revenue Service — Roth Comparison Chart [irs.gov].
Internal Revenue Service — Publication 969: Health Savings Accounts and Other Tax-Favored Health Plans [irs.gov].
Internal Revenue Service — One-Participant 401(k) Plans [irs.gov].
Internal Revenue Service — Publication 560: Retirement Plans for Small Business [irs.gov].
Internal Revenue Service — 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 [irs.gov].
Disclosures
This communication is general in nature and provided for educational and informational purposes only. It should not be considered or relied upon as legal, tax or investment advice or an investment recommendation, or as a substitute for legal or tax counsel. Any investment products or services named herein are for illustrative purposes only and should not be considered an offer to buy or sell, or an investment recommendation for, any specific security, strategy or investment product or service. Always consult a qualified professional or your own independent financial professional for personalized advice or investment recommendations tailored to your specific goals, individual situation, and risk tolerance. All examples are hypothetical and are for illustrative purposes only.
Information contained in the materials included is believed to be from reliable sources, but no representations or guarantees are made as to the accuracy or completeness of information.
Dunham & Associates Investment Counsel, Inc. is a Registered Investment Adviser and Broker/Dealer. Member FINRA / SIPC. Advisory services and securities offered through Dunham & Associates Investment Counsel, Inc.
