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What is a 401(k) program?

I just graduated from college and everyone keeps telling me I need to invest in this

asked by jlkann (8)

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Tags:  economy  investing  money

answers

A 401(k) is a retirement savings account that most employers offer employees. Basically, you can have a portion of your pre-tax earnings deducted and put into an account to be untouched until retirement. This money is invested in funds of your chose in hopes of increasing your account.

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posted by jp1999 (226)
7 votes

A 401(k) is an employer-sponsored retirement savings plan. "401(k)" refers to a section of the Internal Revenue Code that permits participants in such a plan to invest pre-tax dollars up to a certain amount each year. Some employers "match" employees' contributions to a plan in whole or in part.

6 votes

A 401(k) program is a retirement plan offered by your employer. It allows you to defer taxes on some of your earnings while they are invested in stocks, bonds or cash. Many employers will also match contributions up to a certain percentage.

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posted by drJ (832)
6 votes

It is a retirement option in which your pre-tax income, up to 20% or 12,000 of your paycheck, can be put into a retirement plan. Most employers also offer a partial match, which is free money for your retirement. 401(k) contributions also reduce your taxable income.

4 votes

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