A 401(a) and a 401(k) are both employer-sponsored retirement plans, each named after a part of the tax code. There are three key differences between the two:
- A 401(a) is only available if you work for certain governments and nonprofits, while private-sector companies offer 401(k)s to workers.
- While 401(k) contributions are voluntary, a 401(a) can have both mandatory and voluntary contributions, depending on the plan's structure.
- 401(k)s allow workers 50 and older to make extra catch-up contributions, but 401(a)s do not have catch-up contributions.
We'll explore how the two accounts compare in terms of contribution limits, investment options, and more.
How a 401(a) works
Most people are familiar with the more common 401(k), but few understand the 401(a). That's not surprising considering 401(a)s are usually offered only to government and nonprofit employees.
Both employees and employers can contribute to a 401(a). While 401(k)s allow employees to decide how much to contribute, 401(a)s can have mandatory or voluntary employee contributions. These contributions come out of each paycheck, just like 401(k) contributions.
Employers usually decide whether 401(a) contributions are pre-tax or post-tax, and they establish the vesting schedule for employer-matched funds just as they do with 401(k)s. If you leave before you're fully vested, you could forfeit some or all of your company match.
401(a) plans are usually offered to a select group of key employees because they're easy to customize. Companies can craft 401(a)s in a way that suits the participants as an added employee benefit. If an employee later leaves the organization, they can roll over their 401(a) into another qualified retirement plan, such as a 401(k) or an annuity.
Because 401(k)s and 401(a)s are both retirement plans, you're not meant to withdraw money before turning 59 1/2. If you do, you'll pay a 10% early withdrawal penalty on top of income tax, if your contributions were pre-tax.
If you funded your 401(a) with after-tax contributions, you won't pay taxes when you withdraw your contributions, although you could still owe taxes and penalties on your earnings. There are exceptions to the early withdrawal penalty for things such as major medical expenses and educational expenses, but you still owe taxes on these withdrawals.
Contribution limits
Your total contribution to a 401(a) or 401(k), including employee contributions and your company match, is limited to the lesser of:
- $70,000 (2025)
- $72,000 (2026)
- OR 100% of your compensation in either year.
For a 401(k), only $23,500 (2025) or $24,500 (2026) can come from employee contributions.
Catch-up contributions
401(k)s also allow workers 50 and older to make additional catch-up contributions; however, 401(a)s don't have catch-up contributions.
Catch-up contributions have the following limits in 2025:
- $7,500 if you're between ages 50 and 59 or you're 64 or older, for a maximum 2025 employee contribution of $31,000.
- $11,250 if you're between ages 60 and 63, for a maximum 2025 employee contribution of $34,750.
Catch-up contributions have the following limits in 2026:
- $8,000 if you're between ages 50 and 59 or you're 64 or older, for a maximum 2026 employee contribution of $32,500.
- $11,250 if you're between ages 60 and 63, for a maximum 2025 employee contribution of $35,750.
Beginning in 2026, all catch-up contributions must be made on an after-tax (Roth) basis if you earn above a certain threshold, which is set at $145,000 based on 2025 earnings.
Investment options
Employers are typically responsible for choosing the investment options available to employees with both a 401(a) and a 401(k). Typical 401(a) investment options include low-risk government bonds and mutual funds that focus on value-based stocks.
Employees who use a 401(a) often have even fewer investment options to choose from than 401(k) participants. However, since 401(a)s are often designed specifically for a select group of employees, a few choices may be all they need.
401(k)s often offer more investment options but are still known for offering far fewer options than IRAs do. 401(k) options usually include mutual funds, although some companies may offer a handful of exchange-traded funds (ETFs) and annuities as well. Employees who work for publicly traded companies may also be able to purchase company stock if they're interested.
Keep in mind
While it helps to understand the difference between 401(a)s and 401(k)s, you probably won't ever have to decide between the two accounts. Only government and nonprofit employees qualify for 401(a) plans, while employees of for-profit companies will typically have access to a 401(k).
Whichever type of retirement plan you end up with, make sure you review your investment options carefully and understand your plan's rules, particularly those regarding company matches and withdrawals, so you can make the most of your retirement account.
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