A qualified employer retirement plan to which eligible employees may make salary deferral contributions on either a pre or post-tax basis. 401(k) rules apply.
The 401(k) has been perhaps the most impactful account type ever developed. The combination of the automatic payroll deduction which increases the persistance of contributions; the high contribution limits, potential matching contributions and the tax advantages are a tremendous combination. The decision to begin to contribute to a 401(k) at a young age, and the periodic increases in contributions to the maximum allowed as soon as possible is among the most important of decisions an investor can make.