Every Account Type in One Place: Where Your Money Belongs and Why

Part 1: Money you'll need soon

These accounts are for everyday spending, emergencies, and money you'll need in the next few years. The priorities here are safety and access, not growth.

Checking accounts

A checking account is for money moving in and out: your paycheck coming in, your bills going out. Most pay little or no interest. That's fine for money you're about to spend.

What to watch: monthly fees, minimum balance requirements, and overdraft fees. Many banks and credit unions offer accounts without monthly fees.

Savings accounts and high-yield savings accounts

A traditional savings account at many big banks pays very little. A high-yield savings account, often at an online bank, typically pays much more on the same money. In early September 2026, some of the top high-yield accounts were paying a little over 4%.

Both kinds are generally covered by FDIC insurance at banks, or NCUA insurance at credit unions, up to the limits. Your money stays accessible, and the rate can change over time.

This is where an emergency fund usually lives.

Money market accounts vs. money market funds

These sound almost identical. They're not.

• A money market account is a bank or credit union deposit account, usually paying interest and sometimes offering check-writing. It's generally covered by FDIC or NCUA insurance.
• A money market fund is an investment fund, usually held in a brokerage account, that invests in short-term, high-quality debt like Treasury bills. It isn't FDIC insured, though it's designed to be very stable.

Both can be good places for short-term money. It's just worth knowing which one you actually have.

Certificates of deposit (CDs)

A CD locks in an interest rate for a set term, like six months, a year, or five years. In exchange, you usually pay a penalty if you take the money out early. CDs at banks and credit unions are generally federally insured.

CDs work well for money with a known date, like a planned purchase or a tax bill.

Treasury bills

Treasury bills are short-term loans to the U.S. government, lasting a year or less. You can buy them directly from the government at TreasuryDirect.gov or through a brokerage account. Interest is subject to federal income tax but generally exempt from state and local income tax.

Deposit insurance vs. brokerage protection

Two different protections come up a lot:

• FDIC and NCUA insurance protect deposits at banks and credit unions if the institution fails, up to the limits, generally $250,000 per depositor, per institution, per ownership category.
• SIPC protection applies to brokerage accounts. It protects customers if a brokerage firm fails and customer assets are missing, up to certain limits. It does not protect against investments losing value.

In plain terms: deposit insurance protects your cash if a bank fails. SIPC helps if a brokerage fails. Neither protects you from the market going down.

Part 2: Workplace retirement accounts

These are accounts you get through your job. For many people, they're the most powerful savings tools available, because of tax advantages and, sometimes, employer contributions.

The 457(b) plan

Many state and local government employees have access to a governmental 457(b) plan, often called deferred compensation. In Florida, that includes many FRS-covered employees.

• You contribute from your paycheck, either pre-tax or, if your plan offers it, as Roth contributions.
• For 2026, you can contribute up to $24,500, plus an $8,000 catch-up if you're 50 or older, or $11,250 instead if you turn 60 to 63 this year and your plan allows it.
• Governmental 457(b) plans also have a special catch-up in the three years before your plan's normal retirement age that can allow up to $49,000 in 2026.

One feature makes governmental 457(b) plans unusual. When you leave your employer, withdrawals are generally not subject to the 10% early withdrawal penalty that applies to many other retirement accounts before age 59½. Income tax still applies to pre-tax money. That can be valuable for public employees who retire early, like many Special Risk members.

The 403(b) plan

Many public school employees and some nonprofit employees have access to a 403(b) plan. It works similarly to a 401(k), with the same $24,500 employee limit for 2026 and the same age-based catch-ups.

Here's something a lot of school employees don't know. If your employer offers both a 403(b) and a 457(b), the contribution limits are generally separate. That means some people can contribute to both, well beyond what a single plan allows. It's worth confirming how your plans work with your benefits office.

The 401(k)

The 401(k) is the most common workplace plan in the private sector. Same $24,500 limit and catch-ups for 2026. Many employers offer a match, which is essentially extra compensation for saving.

A new rule for higher earners

Starting in 2026, if your wages from your employer were more than $150,000 in 2025, any age-based catch-up contributions in a 401(k), 403(b), or governmental 457(b) have to be made as Roth contributions. If your plan doesn't offer Roth, you may not be able to make catch-up contributions at all until it does.

The FRS Pension Plan and Investment Plan

FRS members participate in one of two primary retirement plans.

• The Pension Plan is a defined benefit plan. Your benefit at retirement is calculated using a formula based on your years of service, your average final compensation, and your membership class. The benefit doesn't depend on the stock market.
• The Investment Plan is a defined contribution plan. Contributions go into an account you invest, and your balance at retirement depends on how much goes in and how the investments perform.

Each works differently, and each has its own rules, trade-offs, and choices. The right fit depends on your situation. The MyFRS Financial Guidance Line, at 1-866-446-9377, offers free guidance on your FRS options.

DROP

The Deferred Retirement Option Program lets eligible FRS Pension Plan members set a retirement date while continuing to work for a limited period, with their monthly benefit accumulating in a DROP account. DROP has specific rules about eligibility, interest, how long you can participate, and how the money is paid out. Those decisions are some of the most important an FRS member makes, and they deserve careful planning.

Part 3: Individual retirement accounts

These are retirement accounts you open on your own, outside of work.

Traditional IRA

• Contributions may be tax-deductible, depending on your income and whether you or your spouse have a workplace plan.
• Money grows tax-deferred.
• Withdrawals are generally taxed as income.
• Withdrawals before 59½ may face a 10% penalty unless an exception applies.
• Required minimum distributions eventually apply.

Roth IRA

• Contributions are made with money you've already paid tax on.
• Money grows tax-free.
• Qualified withdrawals in retirement are tax-free.
• No required minimum distributions for the original owner.
• There are income limits on who can contribute directly. For 2026, the ability to contribute phases out between $153,000 and $168,000 of income for single filers, and between $242,000 and $252,000 for married couples filing jointly.

IRA contribution limits

For 2026, you can contribute up to $7,500 total across all your IRAs, or $8,600 if you're 50 or older. You need earned income at least equal to what you contribute. You generally have until the tax filing deadline, April 15, 2027, to contribute for 2026.

Rollover IRAs

When you leave a job, you can often roll money from a workplace plan into an IRA. That can give you more investment choices. But it's worth thinking through first. For example, moving money out of a governmental 457(b) into an IRA can mean losing that plan's penalty-free early withdrawal feature. A rollover isn't automatically better or worse. It depends on your situation.

Traditional vs. Roth: the simple version

The basic question is whether you'd rather pay taxes now or later.

• Traditional: tax break now, pay taxes later when you withdraw.
• Roth: no tax break now, tax-free later.

If you expect to be in a higher tax bracket later, Roth can be attractive. If you expect to be in a lower bracket later, traditional can be. Many people use both, which gives them more flexibility in retirement to control their taxable income.

Part 4: Health accounts

Health Savings Account (HSA)

An HSA is available to people enrolled in an HSA-eligible health plan. It has what's often called a triple tax advantage:

1. Contributions are tax-deductible, or pre-tax through payroll.
2. The money grows tax-free.
3. Withdrawals for qualified medical expenses are tax-free.

For 2026, you can contribute up to $4,400 for self-only coverage or $8,750 for family coverage, plus a $1,000 catch-up if you're 55 or older.

Starting in 2026, the tax law also made bronze and catastrophic marketplace plans HSA-eligible, opening HSAs to many more people, including some early retirees buying their own coverage.

The money in an HSA rolls over year to year. You don't lose it. Some people use their HSA as a long-term account for health costs in retirement.

One important rule: once you enroll in any part of Medicare, you generally can't contribute to an HSA anymore.

Flexible Spending Account (FSA)

An FSA, offered through many employers, lets you set aside pre-tax money for medical expenses. Unlike an HSA, FSAs are often use-it-or-lose-it, with money left over at the end of the plan year potentially forfeited, though some plans allow a small carryover or a grace period.

Part 5: Accounts for kids

529 plans

A 529 plan is designed for education savings. Money grows tax-deferred, and withdrawals are tax-free when used for qualified education expenses. Florida offers 529 options, including prepaid and savings plans.

529 plans have become more flexible over time, including for some K-12 costs and, under certain conditions, rollovers of limited amounts into a Roth IRA for the beneficiary. The specific rules matter, so it's worth checking them before relying on them.

Trump Accounts

Trump Accounts are a new type of tax-advantaged account for children, launched July 4, 2026. Children born from 2025 through 2028 who are U.S. citizens with a Social Security number can receive a one-time $1,000 government deposit, which must be elected. Family, friends, and employers can contribute up to $5,000 a year combined. The money is invested in low-cost U.S. stock index funds and generally can't be withdrawn until the year the child turns 18, when the account generally becomes a traditional IRA.

Custodial accounts (UTMA/UGMA)

A custodial account lets an adult invest on behalf of a child with few restrictions on investments. The money legally belongs to the child and passes to their control at the age set by state law. There's no special tax treatment beyond some limited rules for children's investment income.

Custodial Roth IRA

If a child has earned income, from a job or even from NIL deals, they may be able to contribute to a Roth IRA, with a parent as custodian. For 2026, the limit is the lesser of their earned income or $7,500.

Part 6: Taxable brokerage accounts

A regular brokerage account has no contribution limits and no restrictions on withdrawals. You can invest in almost anything and take money out whenever you want.

The trade-off is taxes. Interest and dividends are generally taxed each year, and you owe capital gains tax when you sell investments for a profit. Investments held longer than a year generally qualify for lower long-term capital gains rates.

Taxable accounts are useful for goals that don't fit neatly into retirement or education accounts, and for money you want flexible access to without penalties.

Putting it together: a common way to think about order

People often ask, "Which account should I fund first?" There's no single answer for everyone. But here's a framework many people use as a starting point:

1. A starter emergency fund in a high-yield savings account.
2. Any employer match in a workplace plan, since that's extra compensation.
3. High-interest debt, like credit cards, paid down.
4. A fuller emergency fund.
5. An HSA, if you're eligible, given its tax advantages.
6. More retirement savings, through a 457(b), 403(b), 401(k), or IRA, choosing between traditional and Roth based on your tax situation.
7. Other goals, like a 529 for education or a taxable account for flexible savings.

Your order may look different depending on your income, your debts, your benefits, and your goals. A public employee with a pension, for example, may think about retirement savings differently than someone relying only on a 401(k).

Why having different account types matters

There's one more idea worth understanding. Having money spread across different types of accounts, pre-tax, Roth, and taxable, gives you more control later.

In retirement, the income you report affects your taxes, how much of your Social Security is taxed, your Medicare premiums, and, if you retire before 65, whether you qualify for health insurance subsidies. When all your savings are in pre-tax accounts, every withdrawal counts as income. When some of it is in Roth or taxable accounts, you have more ways to manage what shows up on your tax return each year.

In plain terms: it's not just how much you save. It's where it sits.

What I'm not going to do

I'm not going to tell you which accounts are right for you. That depends on your income, your benefits, your taxes, your family, and your goals. And for FRS members, I'm not going to rank the Pension Plan against the Investment Plan. That's a personal decision with real trade-offs.

What I will say is this. When it comes down to it, a lot of people have more options than they realize, and a lot of money sitting in accounts that aren't doing the job it's meant to do.

Let's map your accounts

Most people I meet have accounts spread across different places: a pension or Investment Plan, a 457 or 403(b), an IRA from an old job, a savings account at one bank, a checking account at another. They've never seen them all in one picture.

That's the first thing I do with a new client. We lay out every account you have, what's in it, how it's taxed, and what job it's doing. Then we look at whether the pieces fit together, whether you're using the benefits available to you, and whether your money is set up for the retirement you actually want.

I work as a fiduciary, which means I'm required to act in your best interest. No products to sell.

You've already done the hard part by saving. Let's make sure it's in the right places.

Frequently asked questions

What's the difference between a 457(b) and a 403(b)?

Both are workplace retirement plans with the same $24,500 employee limit for 2026. Governmental 457(b) plans are offered by state and local governments and generally allow penalty-free withdrawals after you leave your employer. 403(b) plans are common for public school and nonprofit employees. If you have access to both, the limits are generally separate.

What's the difference between a Roth IRA and a traditional IRA?

A traditional IRA may give you a tax deduction now, with withdrawals taxed later. A Roth IRA uses after-tax money, and qualified withdrawals in retirement are tax-free. For 2026, the combined IRA limit is $7,500, or $8,600 if you're 50 or older.

Is a money market fund FDIC insured?

No. A money market account at a bank or credit union is generally federally insured, but a money market fund held in a brokerage account is an investment and isn't FDIC insured.

What are the 2026 HSA contribution limits?

For 2026, the HSA limit is $4,400 for self-only coverage and $8,750 for family coverage, plus a $1,000 catch-up for people 55 and older.

Where should I keep my emergency fund?

Many people keep emergency savings in a high-yield savings account or money market account, where the money is safe, accessible, and earning interest.

Can I contribute to both a 457(b) and a 403(b)?

If your employer offers both, the contribution limits are generally separate, which can allow you to contribute to both. Confirm the details with your plan administrator.

Educational content only. Not individualized investment, tax, or legal advice. Figures are for 2026 unless noted and change annually. Benowitz Wealth Management is a brand of Joy Financial Group LLC, a Florida state-registered investment adviser. Consult a qualified tax professional regarding your specific situation.

Neither Joy Financial Group LLC nor Benowitz Wealth Management is affiliated with, endorsed by, or employed by the Florida Retirement System, the Florida Division of Retirement, the State Board of Administration of Florida, MyFRS, or any government agency. FRS members may obtain free, unbiased guidance from the MyFRS Financial Guidance Line at 1-866-446-9377.