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) | HSA | HRA | 401(k) | |
|---|---|---|---|---|
| Primary purpose | Retiree medical benefits inside a qualified plan | Individual current/future qualified medical expenses | Employer-funded medical expense reimbursement | Retirement income via individual account balances |
| Who benefits | Retired employees, spouses, dependents per plan | The individual account holder | Employees covered by the arrangement | Participating employees |
| When benefits are used | Retirement (for retiree medical) | Anytime for qualified medical expenses | While the arrangement is in force | Retirement (subject to plan terms) |
| Medical expense use | Yes — qualified retiree medical per plan | Yes — broad qualified medical expenses | Yes — per arrangement terms | No — retirement income only |
| Relationship to retirement plan | Sub-account of qualified pension/annuity plan | Independent of any retirement plan | Independent of retirement plan | Is itself a retirement plan |
| Common business owner use case | Pre-fund retiree medical alongside a DB or cash balance plan | Current-year tax-advantaged medical savings with an HDHP | Provide retiree or active-employee medical reimbursement | Employee retirement savings + owner deferrals |
Deeper comparisons
One-on-one breakdowns
401(h) vs VEBA
Both 401(h) sub-accounts and VEBAs can play a role in pre-funding retiree medical benefits, but they are structurally very different vehicles with different funding, deduction, and compliance rules.
Read comparison →02401(h) vs HRA
HRAs and 401(h) accounts are both employer-funded and both can play a role in retiree medical strategy, but they are structurally and legally different.
Read comparison →03401(h) vs HSA
HSAs are individual, portable consumer accounts. 401(h) accounts are employer-sponsored sub-accounts inside a qualified pension plan. The two are often mentioned together but are structurally very different.
Read comparison →04401(h) vs 401(k)
Despite the similar names, 401(h) and 401(k) are very different vehicles authorized by different parts of the Internal Revenue Code, with different purposes and structures.
Read comparison →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.