401(k)

A 401(k) is a feature of a qualified profit-sharing plan that allows employees to contribute a portion of their wages to individual accounts.

  • Elective salary deferrals are excluded from the employee’s taxable income (except for designated Roth deferrals).
  • Employers can contribute to employees’ accounts
  • Distributions, including earnings, are includible in taxable income at retirement (except for qualified distributions of designated Roth accounts).