What is a 401k Plan?
A 401k plan enables employees to save for their own retirement. This plan is named for section 401k of the Internal Revenue Code, which permits employees of qualifying companies to set aside tax-deferred funds with each paycheck. The plan also provides employees with a tremendous amount of flexibility - allowing the employee to regularly change the amount of money they wish to contribute to their plan, and giving them plenty of options to choose from in investing their savings over time. This makes a 401k plan different from a regular pension plan because it does not specify from the onset how much money an employee will receive after retirement.
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