A 401(k) plan is a type of defined contribution plan that allows employees to contribute to their retirement savings with pre-tax dollars. Participants typically have a variety of funds in which to invest their money. In many cases, the employer may match a portion of the participant’s contributions to the plan. Money in a 401(k) plan grows tax-deferred until the participant withdraws the funds, whether at termination, disability, or retirement. Also known as a thrift plan.

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