401-k plan
Học thuậtThân thiện
Definition
Noun: A 401(k) plan is a type of retirement savings account offered by employers in the United States. It allows employees to save and invest a portion of their paycheck before taxes are taken out. Employers may also contribute matching funds. Taxes on the savings and investment earnings are deferred until the money is withdrawn in retirement.
Usage
The term "401(k) plan" is used to refer to this specific retirement account arrangement. * She enrolled in her company's 401(k) plan as soon as she was eligible. * A good 401(k) plan often includes an employer match. * He is contributing the maximum amount to his 401(k) plan this year.
Advanced Usage
- "To max out a 401(k)": To contribute the maximum annual amount allowed by law to one's 401(k) plan.
- Her financial goal is to max out her 401(k) every year.
- "Employer match": The money an employer contributes to an employee's 401(k) plan, often based on the employee's own contributions.
- The employer match is a key benefit of the 401(k) plan.
Variants and Related Words
- 401(k): A common shortened form of "401(k) plan," often used interchangeably.
- How much is in your 401(k)?
- Traditional 401(k): The standard type where contributions are made with pre-tax dollars.
- Roth 401(k): A variant where contributions are made with after-tax dollars, allowing for tax-free withdrawals in retirement under certain conditions.
- IRA (Individual Retirement Account): A personal retirement savings account with different rules, often mentioned in relation to rolling over a 401(k) plan upon leaving a job.
Synonyms
- Employer-sponsored retirement plan: A broader term that includes 401(k) plans, 403(b) plans, and others.
- Defined-contribution plan: A category of retirement plans where the payout depends on contribution amounts and investment performance, which includes 401(k) plans.
Related Phrases
- To roll over a 401(k): To transfer the funds from a former employer's 401(k) plan into a new employer's plan or an IRA without tax penalties.
- When he changed jobs, he decided to roll over his 401(k) into an IRA.
- Vesting schedule: The timeline that determines when an employee owns the employer-contributed funds in a 401(k) plan.
- He will be fully vested in the company's matching contributions after five years.
Noun
- a retirement savings plan that is funded by employee contributions and (often) matching contributions from the employer; contributions are made from your salary before taxes and the funds grow tax-free until they are withdrawn, at which point they can be converted into an IRA; funds can be transferred if you change employers and you can (to some extent) manage the investments yourself