Learn More: Retirement Plans

SIMPLE: The SIMPLE retirement plan (for "Savings Incentive Match Plan for Employees") was instituted in 1996 to help employees of small businesses save for retirement. Employees contribute a percentage of their income to an Individual Retirement Account (IRA). Because of very basic (simple, even) qualification and reporting rules, costs tend to be lower for this type of plan.

You're eligible to offer a SIMPLE plan if you a) have less than 101 employees who made $5000 or more in a year, and b) have no other retirement plan.

For more about SIMPLE plans, consult IRS Publication 560.

401K: 401(k) plans are the most popular retirement plans in America today. You have great flexibility in how you can set them up. However, the reporting and eligibility rules are relatively strict, so make sure you research the government regulations about them. 401(k) contributions are pre-tax. The limits are set by the federal government; they can change from year to year.

For more about 401(k) plans, consult the IRS 401(k) Resource Guide.

Roth 401K: A key difference between a Roth 401(k) and a regular 401(k) is when taxes are paid. Contributions to a Roth 401(k) come from after-tax income, but withdrawals are tax-free. A traditional 401(k) is the opposite.

Unlike the Roth IRA, there are no salary limitations on who can contribute to a Roth 401(k).

For more about Roth 401K or 403B plans, see this IRS resource.

IRA: A "traditional" IRA lets employees contribute up to a set limit per year to personal retirement savings. Contributions to a traditional IRA may be deductible, depending on the account holder's income and participation in an employer-sponsored retirement plan. Earnings grow tax-deferred--taxes are not paid until withdrawals are taken. Withdrawals are treated as ordinary income by the IRS.

For more about IRA plans, consult IRS Publications 590.

Roth IRA: As with the 401(k) vs. the Roth 401(k), the difference is when taxes are paid. Contributions to a Roth IRA are subject to tax, but withdrawals are not. A traditional IRA is the opposite.

403(b)/Roth 403(b): A 403(B) or Roth 403(B) can only be offered by qualified 501(c)(3) charitable entities such as hospitals or schools. They are retirement-savings plans for non-profit organizations.

457(b): A 457(b) is a nonqualified retirement plan for state- and local-government employees, and certain other tax-exempt organizations.

408(k)SEP: A 408(k) SEP is a retirement plan designed for self-employed persons. You're not eligible for a SEP if you're enrolled in any other type of retirement plan.

For more about SEP retirement plans, see IRS Publication 4333.