Section 401(k) of the Internal Revenue Code provides for the establishment of employer-sponsored, salary-reduction retirement savings plans. The employee defers a percentage of income on a tax-deferred basis. The employer often matches all or part of the employee's amount. All earnings are also tax-deferred.
a qualified retirement plan established under IRC Section 401(k) whereby an employee is allowed to defer a portion of his or her salary without current income taxation into an employer-sponsored retirement plan
A qualified profit sharing or thrift plan that allows participants the option of putting money into the plan or receiving funds as cash. The employee can voluntarily elect to have his or her salary reduced up to some maximum limit, which is then invested in the employer's Section 401(k) plan.
Internal Revenue Code 401(k) is an employer-sponsored, salary-reduction retirement savings program. The employee defers a percentage of current salary on a pre-tax basis and the employer often matches some portion of that amount. There is a cap on the annual contribution, and a 10% penalty is levied on moneys withdrawn before age 59 1/2.
In the United States, a qualified cash or deferred profit-sharing or stock-bonus plan which allows participants to decide how much of their compensation is deferred. Participant contributions are not taxable until the funds are withdrawn, and sponsor contributions as well as investment earnings are also tax-deferred to the participant. Also called a Cash or Deferred Arrangement (CODA).