US investing accounts explained

The US retirement and savings system offers several tax-advantaged accounts, each suited to a different goal. This article explains the major types and what Luum will track for each.

Educational only. Contribution limits are adjusted annually by the IRS, and the figures below are for tax year 2026. Always verify current limits on irs.gov or with a qualified tax advisor.

On availability, plainly. Luum is Canada-first, and US accounts are not connected yet. US support, the account types, USD as a base currency, and 1099-B style reporting, is built in the product and ships shortly after the Canadian launch. Every "In Luum" note below describes what happens when that ships, not what an account can do today. If you are reading this because you want US support, the contact form is the fastest way to tell us.

US accounts at a glance

Account	What it is for	Contributions deductible?	Withdrawals taxed?	Who can open one
401(k)	Retirement, through your employer	Yes, as pre-tax payroll deductions	Yes, as ordinary income	Employees, if their employer offers one
Roth 401(k)	Retirement, through your employer	No	No, if qualified	Employees, if their employer's plan offers it
Traditional IRA	Retirement	Depends on income and any workplace plan	Yes, as ordinary income	Anyone with taxable compensation
Roth IRA	Retirement	No	No, if qualified	Anyone with taxable compensation, below the income limits
HSA	Medical costs, and retirement after 65	Yes	No for qualified medical expenses; other withdrawals are taxed	People enrolled in a high-deductible health plan
Taxable brokerage	Any goal	No	Gains, dividends and interest are taxed as they happen, not on withdrawal	Anyone

Each account has its own section below with its 2026 limits and what Luum will track.

401(k): employer-sponsored retirement plan

A 401(k) is offered by an employer and funded through pre-tax payroll deductions (traditional) or after-tax contributions (Roth 401(k)). Investments grow tax-deferred, and many employers match a percentage of contributions.

2026 employee contribution limit: $24,500.
Catch-up, age 50 and over: an extra $8,000, so $32,500 in total.
Catch-up, ages 60 to 63: a higher $11,250 instead of the $8,000, giving $35,750 in total. This is the SECURE 2.0 "super catch-up", and it applies only in those four years.
Employer match: does not count against your personal deferral limit.
Traditional 401(k): contributions reduce taxable income now; withdrawals in retirement are taxed as ordinary income.
Roth 401(k): contributions are after-tax; qualified withdrawals in retirement are tax-free.
RMDs: required minimum distributions start at age 73 for a traditional 401(k). Roth 401(k) RMDs were eliminated from 2024.
Early withdrawal: before age 59½, a 10% penalty plus income tax, with certain exceptions.

In Luum, when US support ships: 401(k) accounts (traditional and Roth) appear in your portfolio and net worth, and the balance is treated as a tax-deferred asset. Gains inside a 401(k) are excluded from the capital gains report, because they are not taxable events.

Traditional IRA

An Individual Retirement Account is opened independently of an employer. Contributions may be deductible depending on your income and whether you have a workplace plan.

2026 contribution limit: $7,500, or $8,600 if you are 50 or over, the catch-up is now $1,100, and under SECURE 2.0 it is indexed rather than fixed.
Deductibility: fully deductible if neither you nor a spouse has a workplace plan. If you are single and covered by one, the deduction phases out between $81,000 and $91,000 of income.
Shared limit: the $7,500 is a combined limit across your traditional and Roth IRAs, not per account.
Withdrawals: taxed as ordinary income, with a 10% early-withdrawal penalty before age 59½ (exceptions apply).
RMDs: start at age 73.

In Luum, when US support ships: traditional IRA accounts are tracked and displayed in your portfolio, and gains are excluded from the capital gains report.

Roth IRA

A Roth IRA is funded with after-tax dollars. No deduction now, but qualified withdrawals in retirement are tax-free, including decades of growth.

2026 contribution limit: $7,500, or $8,600 if you are 50 or over, shared with the traditional IRA limit.
Income limits: the ability to contribute phases out between $153,000 and $168,000 for single filers and heads of household, and between $242,000 and $252,000 for married couples filing jointly.
Qualified withdrawals: tax-free after age 59½, provided the account has been open at least five years.
Contributions, but not earnings, can be withdrawn at any time without tax or penalty.
No RMDs during the owner's lifetime.

In Luum, when US support ships: Roth IRA accounts are displayed and tracked. Because qualified withdrawals are tax-free, gains inside a Roth IRA are excluded from the capital gains report.

HSA: health savings account

The HSA is the only account in the US system that is tax-advantaged at all three points: contributions are pre-tax, growth is tax-free, and withdrawals for qualified medical expenses are tax-free. After age 65, withdrawals for any purpose are taxed as ordinary income, which makes it a supplemental retirement account as well as a medical one.

Eligibility: you must be enrolled in a high-deductible health plan.
2026 contribution limit: $4,400 for self-only coverage, or $8,750 for family coverage.
Catch-up, age 55 and over: an extra $1,000. This one is fixed in statute and is not indexed, so it does not move with the limits above.
Rollover: unlike an FSA, unused funds roll over indefinitely.
Investment: once the balance passes a threshold your provider sets, funds can be invested.

In Luum, when US support ships: HSA accounts connected through a supported brokerage appear in your portfolio and net worth, with the invested portion tracked alongside your other holdings. Whether a specific HSA provider can be connected depends on that provider, not on Luum.

Taxable brokerage account

A standard brokerage account has no contribution limit and no withdrawal restrictions, and no special tax treatment either. Capital gains, dividends and interest are taxed in the year they are realised or received.

Holding US-listed securities from a Canadian account also means converting currency at some point, and the conversion spread is usually the largest avoidable cost in doing so, Norbert's Gambit is the mechanism Canadian investors use to avoid it.

In Luum, when US support ships: taxable accounts are where cost-base tracking and capital gains reporting matter most, and realised gains and losses feed the Tax Centre's 1099-B style export. Note the difference from Canada that catches people who hold both: the US uses per-account cost basis with specific-lot identification available, while Canada pools identical property across every account you hold. If you hold securities on both sides of the border, those are two different calculations, not one.

If you are Canadian and looking for the equivalent

Most people who arrive here searching for an IRA or a Roth IRA are Canadian, and the account they can actually open is a different one. The shapes map cleanly even though the rules do not: a Roth IRA is closest to a TFSA, a traditional IRA and a 401(k) to an RRSP, and a 529 to an RESP.

Canadian equivalents of US accounts works through all five pairs, including the two places the analogy breaks: the treaty recognises an RRSP and not a TFSA, and cost base is pooled per taxpayer here rather than tracked per account.

For Canadian account types, see Canadian registered accounts explained →

Common questions

Can I connect a US brokerage to Luum today?

Not yet. Luum is Canada-first and US account support ships shortly after the Canadian launch. The account types, USD handling and the reporting export are built in the product; what is not yet open is connecting a US brokerage to a live account.

Is the IRA contribution limit per account or in total?

In total. The annual limit is shared across your traditional and Roth IRAs combined, so holding both does not double what you can contribute. Employer plan limits are separate from the IRA limit and do not consume it.

How does US cost basis differ from Canadian adjusted cost base?

The US tracks basis per account and allows you to identify specific lots when you sell. Canada pools identical property across every account you hold and requires a weighted average. If you hold securities on both sides of the border, those are two different calculations rather than one with a currency conversion.