3rd Dec 2009 by Gary
A 401(K) plan is offers an employee the choice of being compensated in cash or to take a percentage of the cahse and defer it under a specific plan. This is the most popular way of saving for retirement, as under normal circumstances the contributions to a 401(K) are not taxable until the funds are withdrawn for use. There is an exception to this, where an employee can make what is called an after-tax contributions, which are tax-free. An employee can invest in a qualified plan in two ways, for the 401(K) they can invest in what is called a defined-contribution plan, which means that the balance in the account comes from the amount of money invested by the employee and the way the investments have performed for them. While not required to, employers can match the contributions of their people up to a certain percentage.
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