A 401(k) plan is a qualified defined contribution program that provides an employee with a retirement plan benefit based on the value in the employee’s account at retirement.
A 401(k) plan is a suitable investment for any small to large employer (including nonprofit and for-profit businesses and Indian tribes) that wants to offer a salary reduction plan with design options.
Typical Options of a 401(k) include:
- Flexible matching contribution amounts.
- Variety of vesting options.
- Numerous investment vehicle choices.
- Multiple plan administrator choices.
- Loan provisions.
- Balance transfers.
Benefits of 401(k) Retirement Plans
- Employer and employee may contribute.
- Employer contributions are tax-deductible.
- Earnings on contributions grow on a tax-deferred basis.*
- Pre-tax employee contributions reduce current taxable income.
- Providing this valuable employee benefit can have a positive impact on employer efforts to recruit and retain quality employees.
- Wide range of investment choices.
*Early withdrawal fees will apply if money is withdrawn prior to age 59 ½.
