The-definition.com

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

  • Mental Health Parity Act (MHPA) of 1996
    Mental Health Parity Act (MHPA) of 1996 means prohibits group health plans and insurance ...
  • Transsexual
    Transsexual is an older term that originated in the medical and psychological communities. ...
  • Human resource auditing
    Human resource auditing is the process of assessing HR programs and services to determine ...
  • Piece rate
    Piece rate is a per-piece rate system that pays employees based on the number of pieces ...
  • Baby boomers
    Baby boomers can be defined as the term used to describe those individuals born between ...