401 (k) Plan

401 (k) Plan

Description and Definition of 401(k) Plan

A 401(k) Plan is a tax deferred savings plan which is authorized by section 401(k) of the Internal Revenue Code. Under Section 401(k) a percentage of your salary is withheld and placed in a savings account or the company's profit-sharing plan. Your employer may match a percentage of the amount you have withheld. You are not taxed on the amount deducted from your pay, your employer's matching amount, or any interest or gains until you receive distributions, usually at retirement. Most plans allow employees to borrow from their accounts.


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