Retirement plan decisions made easy
What is the Definition of a 401k Plan?
The definition of a 401k plan is a retirement savings plan authorized by section 401(k) of the United States tax code. Contributions are made by employees and/or employers. These contributions are not subject to tax at the time they are made (unless the plan is a Roth 401k) and their earnings accumulate with tax deferral. Typically the employee makes investment decisions. Withdrawals are taxed at regular income tax rates. For more information on the definition of a 401k plan, check out Lesson 1: "What the Heck is a 401k, and What's so Great About It?" of our online course, The ABCs of Your 401k.
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