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A retirement investment plan in which a contributor defers taxation on contributions until after withdrawal. Under a traditional 401(k), a worker places a portion of his/her pre-tax income into a 401(k) account and allows it to be invested. Taxation is deferred until withdrawal from the account, generally after retirement. Withdrawals prior to the age of 59 1/2 are subject to excise taxes, but the investor must begin disbursements before the age of 70 1/2, unless he/she is still employed with the company offering the 401(k). Most employees are allowed to place up to $16,500 (in 2009) into a 401(k), and some employers have matching contributions.

In 2006, the U.S. Government instituted the Roth 401(k), which allows post-tax contributions in return for tax-free withdrawals after retirement. This gave retirement investors a wider range of choice based upon their specific needs.

Most 401(k)s are employee benefits and workers must have a sponsoring employer to take advantage of one. However, a self-employed person may also set up a 401(k) for himself/herself.


You participate in a 401(k) retirement savings plan by deferring part of your salary into an account set up in your name. Any earnings in the account are federal income tax deferred.

If you change jobs, 401(k) plans are portable, which means that you can move your accumulated assets to a new employer's plan, if the plan allows transfers, or to a rollover IRA.

With a traditional 401(k), you defer pretax income, which reduces the income tax you owe in the year you made the contribution. You pay tax on all withdrawals at your regular rate.

With the newer Roth 401(k), which is offered in some but not all plans, you contribute after-tax income. Earnings accumulate tax deferred, but your withdrawals are completely tax free if your account has been open at least five years and you're at least 59 1/2.

In either type of 401(k), you can defer up to the federal cap, plus an annual catch-up contribution if you're 50 or older.

However, you may be able to contribute less than the cap if you're a highly compensated employee or if your employer limits contributions to a percentage of your salary. Your employer may match some or all of your contributions, based on the terms of the plan you participate in, but matching isn't required.

With a 401(k), you are responsible for making your own investment decisions by choosing from among investment alternatives offered by the plan. Those alternatives typically include separate accounts, mutual funds, annuities, fixed-income investments, and sometimes company stock.

You may owe an additional 10% federal tax penalty if you withdraw from a 401(k) before you reach 59 1/2. You must begin to take minimum required distributions by April 1 of the year following the year you turn 70 1/2 unless you're still working. But if you prefer, you can roll over your traditional 401(k) assets into a traditional IRA and your Roth 401(k) assets into a Roth IRA.

References in periodicals archive ?
La coda y el resultado (o resolucion) tienen funciones que coinciden parcialmente La primera senala explicitamente que la historia ha terminado, a traves de expresiones como "y eso fue todo", "y eso fue lo que nos conto", "y asi termino la cosa" (ejemplos de Silva-Corvalan 2001).
Assim, o objetivo desse estudo foi descrever a producao da coda simples (morfologica ou lexical) e da coda complexa com /S/, em final de palavra, em criancas com desvio fonologico.
De um ponto de vista fonologico, a partir da formalizacao de Selkirk (1982), pode-se dizer que a coda nao e um constituinte imediato da silaba, mas uma ramificacao de um constituinte.
Mark P Frissora, the company chairman and chief executive officer, said, 'Hertz's partnership with CODA Automotive is another element of our long term strategy to provide consumers with electric vehicle access on a global scale.
MARKETING STRATEGY: In 2007, Coda began serving free coffee at Colorado running events.
The extent to which sonority values affected word coda production was also studied based on the scale of sonority values by Hogg and McCully (1987).
The complete Coda sedan will be built in China by Hafei Automotive, headquartered in Harbin, Heilongjiang province.
In addition, designated Roth contributions must satisfy the basic requirements for elective contributions made under a qualified CODA.
The Coda, a 29-unit, seven-story newly constructed apartment building, located on Manhattan's burgeoning and vibrant Lower East Side is in the market for sale through Eastern Consolidated, at an all-cash asking price of $18.
Deathstalker Coda is a highly recommended pick and essential reading for any prior Deathstalker fan.
Financial systems software company CODA Group has announced the release of its CODA-Financials version 10 financial management software.