Side by side

401(h) vs HSA vs HRA vs 401(k).

Four very different vehicles. Understanding the structural differences is the first step in deciding whether a 401(h) sub-account may fit your situation.

401(h)HSAHRA401(k)
Primary purposeRetiree medical benefits inside a qualified planIndividual current/future qualified medical expensesEmployer-funded medical expense reimbursementRetirement income via individual account balances
Who benefitsRetired employees, spouses, dependents per planThe individual account holderEmployees covered by the arrangementParticipating employees
When benefits are usedRetirement (for retiree medical)Anytime for qualified medical expensesWhile the arrangement is in forceRetirement (subject to plan terms)
Medical expense useYes — qualified retiree medical per planYes — broad qualified medical expensesYes — per arrangement termsNo — retirement income only
Relationship to retirement planSub-account of qualified pension/annuity planIndependent of any retirement planIndependent of retirement planIs itself a retirement plan
Common business owner use casePre-fund retiree medical alongside a DB or cash balance planCurrent-year tax-advantaged medical savings with an HDHPProvide retiree or active-employee medical reimbursementEmployee retirement savings + owner deferrals

Next step

Not sure which vehicle (or combination) fits?

A 401(h) specialist can help you compare 401(h), HSA, HRA, and 401(k) options in light of your plan and participant group.

Availability, tax treatment, and plan design depend on the facts and circumstances of the employer, plan document, participant group, and applicable law. 401h.com provides general educational information only — not tax, legal, actuarial, investment, or ERISA advice. Consult qualified tax, legal, actuarial, and plan professionals.