Which of the following plans is typically used to set aside funds for retirement while allowing for higher annual contribution limits?

The 401(k) plan is designed primarily for retirement savings and offers higher contribution limits compared to other retirement accounts. This plan is employer-sponsored, and it allows employees to contribute a portion of their salary on a pre-tax basis, effectively reducing their taxable income. As of 2023, the contribution limit for 401(k) plans is significantly higher than that for IRAs, allowing individuals to save more for retirement in a tax-advantaged way.

Additionally, many employers offer matching contributions, which can further increase the total retirement savings. Because of these features, the 401(k) is a popular choice for individuals looking to maximize their retirement savings potential while benefiting from tax breaks during their working years.

In contrast, the other plans mentioned, such as the Traditional IRA and SIMPLE IRA, have lower contribution limits and different eligibility rules that make them less suitable for individuals aiming for higher annual contributions. A Health Savings Account focuses on medical expenses rather than retirement savings, which makes it irrelevant in this context.