What is a 401(k) Plan?

A 401(k) plan technically is not a separate type of plan; it is a profit-sharing or stock bonus plan that contains a "qualified cash or deferred arrangement." (CODA) Under a qualified CODA, plan participants may elect to contribute a portion of their current compensation, on a pre-tax basis, to the plan. Such contributions are commonly referred to as salary deferrals or elective contributions. Special rules apply to 401(k) plans, including nondiscrimination requirements and limits on the amount an employee can elect to contribute. Employer contributions to a 401(k) plan can be either profit sharing contributions or matching contributions. Matching contributions are made to participants who make salary deferral contributions. Employers are not required to offer a match; however, many employers provide a match because doing so makes it easier for the plan to satisfy applicable nondiscrimination rules. ... more

A traditional 401(k) plan is a retirement savings and investment plan offered by employers to their employees. Many employers like it because it costs less than a traditional pension plan; many employees like it because it can be more lucrative and gives them more control over their retirement income. With a 401(k) plan, you can take a portion of the cash your employer would have paid you in wages and choose instead to contribute it to a tax-qualified retirement account, set up according to rules in section 401(k) of the tax code. You contribute the funds pre-tax, so you don't have taxes withheld on the portion of your income contributed. As a benefit of employment, many employers will match anywhere from 1 to 100 percent of your contribution to a 401(k) plan. Most plans allow you to invest in many different kinds of instruments: different kinds of stock and bond mutual funds, money market funds, and guaranteed investment funds that pay a pre-set interest rate. You determine what porti ... more

A 401(k) is an account that an employee uses to save for retirement. This account allows the employee to defer current income taxes on the saved money and interest earnings until the employee withdraws the money. The employee typically has a portion of his or her paycheck put directly into the account. Most 401(k) plans are employer sponsored plans where the employer can match part or all of the worker's contributions. ... more

The 401(k) investment plan lets you save money for retirement and have some of your contributions matched by your employer. ... more

A 401(k) Plan is an Employer sponsored Plan that allows employees to save money on a pre-tax basis. ... more

A 401(k) plan is one of the most popular retirement plan benefits available today. Nearly 50% of all companies in the U.S. offer 401(k) plans to their employees. Nearly 40 million Americans entrust a big part of their future to their 401(k) plans. Why is it so popular? A 401(k) plan lets you reduce your taxable income and save money for retirement on a tax-deferred basis. Many employers match employee contributions at a rate of 10, 25, 50, and sometimes even 100 percent, which makes savings through a 401(k) plan pay off even before it begins to acquire investment earnings. ... more

A 401(k) plan* (named after a section of the federal tax code) is an employer established plan somewhat similar to an Individual Retirement Account (IRA). Both plans are designed primarily as retirement savings plans. A 401(k) plan is generally funded with your before-tax salary contributions and, oftentimes, matching contributions from your employer. Your contributions, employer contributions (if any) and any growth in your 401(k) account are tax-deferred until you withdraw the money. Once money is in your 401(k), you generally cannot make withdrawals before age 59½, except for special circumstances. Many employers, however, include loan provisions in their plans. Benefits from Investing in a 401(k) plan • Your contributions, any employer contributions, and any earnings on your 401(k) account grow tax-deferred; which means they are not taxed until they are withdrawn. Consequently, you have more dollars working for you, and your account balance may grow more quickly. • Your current gro ... more

A 401(k) plan is a type of retirement plan which is named for a section of the tax law that allows employees to contribute a portion of their compensation, before income taxes, to a company-sponsored retirement plan. The amount the company withholds from your paycheck is called a 'deferral'. ... more

A 401(k) plan* (named after a section of the federal tax code) is an employer established plan somewhat similar to an Individual Retirement Account (IRA). Both plans are designed primarily as retirement savings plans. A 401(k) plan is generally funded with your before-tax salary contributions and, oftentimes, matching contributions from your employer. Your contributions, employer contributions (if any) and any growth in your 401(k) plan are tax-deferred until you withdraw the money. Once money is in your 401(k) plan, you generally cannot make withdrawals before age 59 1⁄2, except for special circumstances. Many employers, however, include loan provisions in their plans. Benefits from Investing in a 401(k) plan • Your contributions, any employer contributions, and any earnings on your 401(k) account grow tax-deferred; which means they are not taxed until they are withdrawn. Consequently, you have more dollars working for you, and your account balance may grow more quickly. • Your curren ... more

A 401(k) plan is a type of qualified retirement plan. It is typically sponsored by a company, although there are various other entities such as schools and non-profit organizations that offer 401(k) plans to employees. A primary distinction of a 401(k) plan is that it offers to employees what is referred to as a salary deferral arrangement. A salary deferral is an amount of an employee’s salary that is deferred — that is to say tax deferred — until the employee withdraws the money from the plan. The benefit to the employee is that salary deferrals are contributed pretax. This not only lowers the employee’s taxable income, it potentially saves money for retirement tax-free during the working years when a person is generally in a higher tax bracket than that of the retirement years. In addition to the salary deferral feature, many 401(k) plans provide a matching contribution on part or all of an employee’s salary deferrals. There are various formulas that an employer may use for the matc ... more