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401(k) vs. 401(a): What’s The Difference Between a 401k And a 401a?

Most people are familiar with 401(k)’s, but what about 401(a)’s? Are they the same thing? What’s the difference? In this article, we’ll explore the differences between 401(k)’s and 401(a)’s and discuss the benefits of each.

401(k)’s and 401(a)’s are both types of retirement savings accounts found in the same section, section 401 of the Internal Revenue Code, but there are a few key differences between the two.

  • 401(a) plans are generally offered by government and non-profit employers, while 401(k) plans are more common in the private sector.
  • 401(a) plans have a contribution percentage limit of 25% of the employee’s compensation.
  • The compensation limit for a 401(a) in 2024 is $345,000 (see here). There is no compensation limit for a 401(k).
  • 401(k) employee contribution limit in 2024 is $23,000. 401(k) total contribution limit (including employee & employer) in 2024 is $69,000. (Same as
  • 401(a) has a contribution limit of $69,000.
  • 401(a) is offered to specific employees. 401(k) is offered to all employees.
  • 401(a) plans, the employer must make contributions. The employer determines employee contributions. 401k employee contributions are elective.
  • Participating in a 401(k) is voluntary; participating in a 401(a) is mandatory.
  • 401(k) plans offer an “Age 50 Catch-Up “; 401(a) plans do not.

As of 2024, employees can contribute 100% of their income, up to $23,000 annually to a 401(k). Employee and employer can be a maximum of $69,000.

Employees can contribute 25% of their income, up to $66,000 for a 401(a).

The IRS has a “help” page on governmental 401(a) plans that provide some information if you don’t want to read through the tax code. It can be found here.

SponsorGovernment and Non-ProfitPrivate-sector & For-Profit
Income Limit$345,000 None
ContributionsMandatory for employer. Employer determines employee contributionsVoluntary
Employee Contribution Limit$69,000$23,000
Catch-Up ContributionNoneYes, $7,500
The numbers provided are for the 2024 tax year.

401(a) vs. 401(k): Main Differences

There are several key distinctions between 401(a) and 401(k) plans. The retirement saving plan available to you depends on who your employer is.

For-profit companies or corporate employers offer 401(k) plans to their eligible employees. Companies and for-profit corporations usually provide 401(k) plans to their employees. It has to be offered to all employees.

A 401(a) plan is a retirement savings plan for government employees, non-profit organizations, and educational institutions.

Because most employees work in for-profit organizations rather than non-profits, a greater number of individuals are offered the 401(k) plan. Hence, most of us have at least heard of 401(k) plans but are probably not familiar with 401(a) plans.

401(a) vs. 401(k): Employee Eligibility

To be eligible for a 401(a) or a 401(k), an employee must be at least 21 years old and have completed the specified period of employment with the plan’s sponsor, according to Section 410(a)(1) of the Internal Revenue Code.

401(k) and 401(a) plans have different durations. The length of time is one year for 401(k) plans and two years for 401(a) plans.

401(a) vs. 401(k): Employee Participation

There’s also a distinction between 401(a) and 401(k) in terms of who can join the plans and how much they may invest.

Every full-time employee in a given company may participate in the 401(k) plan.

A 401(a) plan, on the other hand, is only available to a select group of workers, usually as an incentive to remain employed with the business.

Secondly, An employee may choose how much money he or she would want to contribute to the retirement savings account with a 401(k) plan. Employees, therefore, can contribute a certain percentage of their pay to a 401(k). The contribution is usually before taxes, but some companies offer after-tax (Roth) contributions.

On the other hand, with a 401(a), the employer is in charge of the plan, setting contributions, and whether they are before or after-tax contributions.

401(a) vs. 401(k): Employer Contributions

Beyond employee eligibility and participation, the two retirement plans also differ in whether the employer must contribute money.

The employer must contribute to the 401(a) plan. Employee contributions are, however, not always required. They can also be voluntary if that is what the employer decides.

By contrast, with a 401(k), an employer may make matching contributions. In this situation, the employer puts in money to the 401(k) equal to what an employee does up to a certain percentage of their salary.

Employers have no obligation to match your 401(k) contributions. If they match, it’s up to them how much. The employer cannot give more than the legal amount to any one person. As of 2024, that’s 100 percent of the employee’s salary and up to a maximum of $69,000‚Äč.

401(a) vs. 401(k): Employee Contributions

Contributions to a 401(a) are either required or optional. It’s up to the employer to decide.

Furthermore, the employer determines whether those payments are made before or after taxes.

While employees are sometimes given the option to contribute voluntarily, employers must always contribute to the account.

When the employer adds to an employee’s plan, the employer has a number of options. They can pay a set amount each pay period, or they may match a specific percentage of the employee’s contributions. A third option is matching the employee’s contributions with a fixed dollar amount.

If the employee has the option and makes a voluntary contribution to the account, both those contributions and their earnings are fully vested immediately. That means the money is his, even if he leaves the company.

In the traditional 401(k) plan, the employee chooses their contribution amounts.

Is a 401(a) Better Than a 401(k)?

Both 401(a) and 401(k) offer retirement savers the ability to grow their money tax-deferred. This means that the money in the account can grow without being taxed each year.

As an employee, 401(k) plans can be considered better because participation is voluntary, and the employee determines how much to contribute. The employer determines 401(a) contributions.

Outside of participation and contribution rules, the plans are essentially the same.

Related Questions

Can you withdraw money from a 401(a)?

Money can be withdrawn from your 401(a) account early in the form of a 401(a) loan.

The IRS stipulates that you can take out a 401(a) loan; however, it is ultimately up to your employer. If your employer refuses to provide you with a 401(a) loan, you will not be able to get one. There are legal limitations on the amount of money you may borrow if loans are permitted in your plan.

You may borrow up to half of the value of your 401(a) account, with a maximum amount of $50,000.

Can I take money out of my 401(a) to buy a house?

The IRS has no special rules about borrowing money from your 401(a) to buy a house. The normal 401(a) loan rules apply. You are allowed to borrow 50% of your 401(a) account value up to a max of $50,000.


401(k) and 401(a) are both types of retirement savings accounts. There are a few main differences between the two. A 401(k) is available to all employees, while a 401(a) is only available to a select group of workers. Employers must contribute to a 401(a), while employees can choose to contribute to a 401(k). Employee contributions to a 401(a) are either required or optional, while employee contributions to a 401(k) are always voluntary.