Explain like I’m five

There are two basic categories of accounts, employer plans and IRAs (individual retirement account). The most common employer plan is a 401K but different sectors have slightly different names, generally teachers have a 403b and postal worker get the tsp (thrift savings plan) to name a few. While there are some minor differences most of these employer plans work very similarly. When you get employed you will have to see which one your employer offers.

An IRA (individual retirement account) is just an account you can open on your own.

Both of those account types have 2 different tax treatment options. “Traditional” (sometimes called pre-taxed or taxed deferred) and “roth” (sometimes called after tax) for example If I made $1,000 and put $100 in a traditional IRA I would only pay taxes as if I only made $900 (1000-100) but whatever that $100 grows into is subject to tax when I take it out of the traditional IRA in retirement. In a roth if I made $1,000 and put $100 in I would pay taxes on all that $1,000 but whenever that $100 in the roth turns into through investing I can take out of the account paying no tax when I am older and retired.

For employer plans you make contributions by your employer taking money out of your paycheck and sending it to the account automatically. Employer plans also can offer a match, meaning your employer will put money in your account along with your money going into the account. If you leave a company the money in the employer plan is your money (the match may be subject to some restrictions usually based on time with the company). Your general options for the account is to leave it at that company 401k, convert that 401k to an ira (this is called a rollover) and manage it yourself, or sometimes your next employer will let you roll your previous 401k into your new employers 401k. Also not all employers offer both types of tax treatments for their employer plans.

For an IRA you just connect your bank account and initiate the a transfer as you want.