Which type of retirement account is typically employer-sponsored?

• A. Traditional IRA
• B. Roth IRA
• C. 401(k)
• D. Health Savings Account (HSA)

Answer: (C)

The correct answer is the 401(k) because it is a retirement savings plan that is specifically designed to be sponsored by an employer. In a 401(k) plan, employees can contribute a portion of their salary to the plan, and employers often enhance this benefit by offering matching contributions, which can significantly boost retirement savings. These plans are subject to specific regulatory guidelines and allow employees to save for retirement on a tax-deferred basis, meaning taxes are paid only upon withdrawal after retirement.

In contrast, traditional and Roth IRAs are individual retirement accounts that can be opened by anyone and are not tied to employment status. They allow individuals to contribute their own funds, but they do not typically include employer contributions. Lastly, a Health Savings Account (HSA) is primarily used to save for medical expenses rather than retirement, although it does have certain tax advantages. Thus, the unique employer sponsorship and potential matching contributions associated with 401(k) plans make them the correct choice here.