Definition

401(k) Plan

401(k) plan- the most popular defined contribution plans are based on section 401 (k) of the Internal Revenue Code, and called 401(k) plans. Here the employee authorizes the employer to deduct a sum from his or her paycheck before taxes, and to invest it in the bundle of investments in his or her 401 (k). The deduction is pretax, so the employee pays no tax on those until after he or she retires (or removes the money from the 401 (k) plan). The person can decide to deduct any amount up to the legal maximum.

Share it:  Cite

More from this Section

  • Positive reinforcement
    Positive reinforcement is the process of acknowledging specific behaviors with positive ...
  • Exit Interview
    Exit interviews are interviews with employees who are leaving the firm, conducted for ...
  • Expatriates
    Expatriates (“expats”) are noncitizens of the countries in which they are working ...
  • Good faith effort
    Good faith effort is the effort and action an organization puts forth to correct goals ...
  • Unfair labor practice (ULP)
    Unfair labor practice (ULP) is an unfair labor practice (ULP) is a violation of a right ...