What are 401(k) plans?
The U.S. Department of Labor defines a 401(k) Plan as a contribution plan that the employee can make contributions from his or her paycheck before taxes are taken out. The contributions go into a 401(k) account, with the employee often choosing the investments based on options provided under the plan. In some plans, the employer also makes contributions, matching the employee’s contributions up to a certain percentage. SIMPLE and safe harbor 401(k) plans have additional employer contribution and vesting requirements.
Why Should I Participate in the Company 401K Plan? Listed below are some of the biggest reasons to consider participating in your company’s 401(k) program as soon as possible.