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Understanding Your Retirement Account

Jun 06, 2025

A retirement plan helps you save money while you work, so you have enough when you retire. These plans often offer tax benefits and might include contributions from your employer, making them a strong option for securing your financial future.

It Could Last Longer Than You Think

A 65-year-old woman is estimated to live to 86.9 while a 65-year-old man is expected to live to 84.31



Social Security Falls Short


In July 2024, the average monthly Social Security benefit for retired workers was $1,919.40, which comes out to $23,032.80 per year.2


Social Security Might Be Taxed by Your State

The IRS taxes up to 85 percent of your Social Security benefits, but depending on where you live, you might not have to pay state income taxes on your Social Security benefits.3

Here are the two most popular retirement accounts that MetLife may offer through your employer to you:

Mutual Funds Retirement Account

This account allows you to invest in a selection of mutual funds tailored to your risk tolerance and retirement goals. By diversifying your investments, you can potentially achieve higher returns while mitigating risk.

Annuity Retirement Account

An annuity retirement account offers a reliable stream of income during your retirement years. With this option, you make either a lump-sum payment or a series of payments to MetLife, and in return, you can receive regular income disbursements for a set period or for life.

Both accounts come with tax benefits and may include employer contributions, making them robust options for long-term financial security.

Fun Fact:

Ever wondered how retirement accounts like 401(k), 403(b), and 457(b) got their names? They are actually named after the sections of the Internal Revenue Code that governs them. So, when you hear "403(b)", you’re hearing a piece of tax law!

Retirement Plans

403(b)

457(b)

401(a)

401(k)

403(b)

Designed for employees of nonprofits, schools, and religious organizations, a 403(b) works similarly to a 401(k).

  • Year Added to the Code: 1958, over 60 years ago.
  • Eligibility: Only certain tax-exempt organizations and public education institutions can sponsor 403(b) plans.
  • Investment Options: Generally limited to annuities and mutual funds.
  • Universal Availability: All employees must have the right to make elective deferrals with limited exceptions.
  • Special Contribution Limits: There are unique contribution limits for church employees and employees with 15 years or more of service.
  • No Employer Contribution Deductibility: Nonprofits do not need a deduction for their employer contributions.

457(b)

Offered to state and local government employees, and some nonprofits. Contributions are pre-tax, and withdrawals are taxed.

  • 457(b) plans were established in 1978.
  • Designed for state and local government employees and certain non-profit organizations.
  • Provides eligible employees the ability to defer compensation on a pre-tax basis.
  • Annual contribution limits are set by the IRS and can change each year.
  • Catch-up contributions allowed for employees over the age of 50.
  • No early withdrawal penalty for distributions taken before age 59½.
  • Rollover options available to other retirement plans like 401(k) or IRA.
  • Funds grow tax-deferred until withdrawn.
  • Distributions are taxed as ordinary income.
  • Can complement other retirement plans offered by employers.

401(a)

A customizable plan typically offered by government agencies, educational institutions, and nonprofits. Employers often set the contribution rules.

  • Inception Date: The 401(a) plan was established in 1978.
  • Type of Plan: A 401(a) is a retirement savings plan.
  • Eligibility: Typically offered by government employers, educational institutions, and non-profit organizations.
  • Contributions: Contributions can be made by both employers and employees.
  • Contribution Limits: The limits are set by the IRS annually.
  • Vesting Schedule: The plan may have a vesting schedule which determines when employees own employer contributions.
  • Investment Options: Employees can choose from a range of investment options.
  • Tax Benefits: Contributions are made with pre-tax dollars, which reduces taxable income.
  • Distribution Rules: Funds can be withdrawn upon retirement, termination of employment, or as specified by the plan.
  • Portability: The plan can be rolled over into another qualified retirement plan or an IRA.

401(k)

A 401(k) is a retirement savings plan offered by private-sector employers. You contribute a portion of your paycheck before taxes, and your money grows tax-deferred until withdrawal.

  • A 401(k) plan is a retirement savings plan sponsored by an employer.
  • It allows employees to save and invest a portion of their paycheck before taxes.
  • The 401(k) plan code was established in 1978 by the Revenue Act and came into effect in 1980.
  • Employer matching contributions can enhance retirement savings.
  • Contributions are made pre-tax, reducing taxable income.
  • Withdrawals can generally be made penalty-free after age 59½; early withdrawals incur a 10% penalty and taxes.
  • Required Minimum Distributions (RMDs) must start at age 73.
  • Investment options typically include stocks, bonds, and mutual funds.
  • Early withdrawal penalties and contribution limits are notable limitations.