What to Know About 401k Plans
A 401k plan is one of employees' most popular retirement savings options . These accounts allow you to save tax-deferred, and many companies match part of your contributions. It's essential to know how your 401k account works and what investment options you have available. Your choices will affect how quickly your money grows and how much you'll have in the future. Contributions to a 401(k) plan are generally made on a pretax basis. They are deducted from an employee's paycheck and go directly into the account before payroll taxes are withheld. This reduces the employee's taxable income and helps them in retirement by reducing their overall tax bill when they withdraw their savings through withdrawals or a lump sum distribution. Most 401(k) plans also offer an employer match. These are contributions from an employer that are matched by the employee, generally up to 6 percent of their annual pay. Some 401(k) plans offer a health savings account (HSA), a tax-advantage