Glossary
Looking to learn more about international payroll, crypto payroll, stablecoins or Bitcoin? We've compiled this list of educational definitions to help you understand these topics in depth.
Looking to learn more about international payroll, crypto payroll, stablecoins or Bitcoin? We've compiled this list of educational definitions to help you understand these topics in depth.
A 401(k) is a retirement savings plan sponsored by an employer that allows employees to save and invest a portion of their paycheck before taxes are taken out. The plan offers a tax-deferred way to save for retirement, meaning the money grows tax-free until it is withdrawn in retirement. Many employers also offer a matching contribution, where they contribute a certain amount for every dollar an employee saves, up to a specific limit.
The 401(k) plan is a cornerstone of retirement savings in the United States, providing a way for employees to build a nest egg for their later years. Its tax advantages and potential for employer matching contributions make it a powerful tool for long-term financial planning. The plan is regulated by the IRS and the Department of Labor and is governed by the Employee Retirement Income Security Act (ERISA). Participants can choose from a range of investment options, such as mutual funds, and can typically take their plan with them when they change jobs. It is a key component of personal finance and a major contributor to retirement security.