A 401k is a retirement savings plan sponsored by an employer. It’s named after the section of the Internal Revenue Code that governs it. Employees can choose to have money deducted from their paychecks and deposited into their 401k accounts. The money in the report can then be invested in various ways, including stocks, bonds, and mutual funds.
The main benefit of a 401k is that it allows employees to save for retirement on a tax-deferred basis. This means they won’t have to pay taxes on the money until they retire and begin withdrawing it. Another benefit is that employer matching contributions can provide a nice boost to employees’ retirement savings.
If you’re thinking about saving for retirement, a 401k may be a good option for you. Be sure to talk to your employer about their 401k plan and how it works.