The employer match is the highest-return instrument most people will ever be offered, and it is not an investment. An employer matching 50 cents on the dollar up to 6% of pay hands an employee earning $145,000 who defers $8,700 a further $4,350, which is an immediate 50% return on the deferral before the market does anything. Where vesting is a three-year cliff, that 50% annualises to 14.47% a year, and the guarantee comes from a contract, with no market involved. Declining to defer forfeits $4,350 a year and $13,050 over the cliff. That's money you leave on the table for nothing in return.
Two caveats come with it. The match is conditional on staying long enough to vest, so an employee who expects to leave within the cliff should discount it. And the deferral itself is locked in a retirement wrapper with its own withdrawal rules, so it is not the same money as cash.
Contribution and catch-up limits exist in both systems and are indexed, which makes them the most perishable numbers on this page. There is an annual elective deferral limit for workplace plans, a separate and smaller limit for individual retirement accounts, an additional catch-up amount from a stated age, and a further enhanced catch-up for a narrow age band introduced by recent legislation. Health savings accounts have their own self-only and family limits with their own catch-up [verify: the current-year limits are published by the IRS in an annual notice. Read that notice at irs.gov and skip any secondary summary, because every one of these figures moves]. No computation here depends on a limit's exact value, and none of yours should either. State the contribution as a given and treat the limit as a constraint you check separately.
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Roth vs traditional and target-date funds
Traditional against Roth was settled arithmetically by the wrapper table and needs only the decision rule restated. The ratio of Roth to traditional is (1 − t now) ÷ (1 − t later). At 32% now and 24% later, Roth is 10.53% worse. At 12% now and 22% later, Roth is 12.82% better. At equal rates they are identical to the cent. Everything else in the argument is a forecast of your own future bracket, plus two second-order points that are real: a Roth has no required minimum distribution during the original owner's lifetime, and Roth contributions effectively shelter more because the tax was paid from outside the account.
Target-date funds are a glide path in a wrapper: an asset mix that shifts from equity toward bonds as a stated retirement year approaches, rebalanced by the fund. They're a good default for a person who will otherwise do nothing, and their cost varies by more than an order of magnitude between an index-built version and an actively built one. The whole decision is the expense ratio and the glide path's landing point, and both are printed. Read the glide path's equity share at the target date, because "2050" tells you nothing about whether that fund holds 30% or 55% equity when you get there.
How does the National Pension System work?
India's National Pension System is structured differently and the difference is in the exit. Contributions go into a Tier I account, which is the retirement account with the withdrawal restrictions, or a Tier II account, which is a voluntary and liquid add-on with no lock and no deduction. Within Tier I, an active-choice subscriber allocates across equity, corporate debt, government securities and an alternatives sleeve, with the equity share capped and the cap tapering with age under the standard option [verify: the PFRDA investment guidelines and the current asset-class caps and taper schedule, pfrda.org.in].
The exit is the part to compute, and since December 2025 it depends on who you are. At the normal exit age a non-government subscriber may take up to 80% of the corpus as a lump sum and must put at least 20% into an annuity from a registered life insurer (a small corpus may be withdrawn in full). A government subscriber keeps the older split of up to 60% as a lump sum and at least 40% annuitised [verify: the PFRDA exit regulations as amended on 12 December 2025, pfrda.org.in, checked October 2026]. On an ₹80,00,000 corpus a non-government subscriber can take ₹64,00,000 in hand and must annuitise ₹16,00,000. At an annuity rate of 6.6% that buys ₹1,05,600 a year of income, which is taxable at slab in the year received. For a subscriber still in the 30% bracket with cess, the after-tax income is ₹72,653, an after-tax yield of 4.5408% on the annuitised corpus. Under the 60/40 split the same corpus gives ₹48,00,000 in hand, ₹32,00,000 annuitised, ₹2,11,200 a year before tax and ₹1,45,306 after it. The lump-sum tax exemption hasn't kept pace. As of October 2026 it still covers 60% of the corpus, so the extra 20% a non-government subscriber can take is taxable, and the private-client material works through the lag.
That last number sums up the product's exit, and it carries a live warning. The lump-sum share and the annuitisation share are set by regulation. The tax treatment of each has changed several times and the treatment of the annuity purchase and the annuity income are governed by different provisions. Any statement about the after-tax outcome of a National Pension System exit is a statement about a rule that has moved and will move again [verify: the exemption for the lump sum and the taxability of annuity income, incometaxindia.gov.in and pfrda.org.in, both read on the same day]. Compute the structure. Look up the rate.