All four are retirement plans classified as “defined contribution” plans. All four are offered by employers through a third party financial institution called an “administrator” as a tax-deferred investment vehicle to encourage you to save for retirement. So what’re the differences?
A common misconception is that 401(k)s and IRAs save you from income tax. They don’t, but they do save you from capital gains tax. With compounding, the additional earnings from tax-advantaged accounts over taxable accounts can be large.
Gains from sold investments, known as capital gains, are taxed lower than income. Interest and dividends are taxed as income unless the government considers the dividends “qualified”.