A 401(k) plan is a retirement investment plan offered by U.S. employers to their employees. In this plan, employees can make pre-tax contributions, and taxes are deferred until funds are withdrawn. When an employee participates in a 401(k), they elect to have a percentage of their pre-tax salary withheld from each paycheck and directed into an investment account. Many employers also provide a partial or full matching contribution, further boosting the employee’s retirement savings. 401(k) plans are a widely used vehicle for long-term retirement savings in the United States.
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