401(k) Retirement Plan: Who Qualifies and What You Get
Learn how the 401(k) retirement plan works, including how to make tax-deferred contributions and why employer matching matters for your savings.
A 401(k) is a retirement savings plan offered by employers that allows you to set aside money for the future before taxes are taken out of your paycheck.
Who it's for
This plan is available to employees of private-sector companies that choose to participate in the program.
What you get
You can contribute a portion of your salary into the plan on a tax-deferred basis, meaning you do not pay taxes on that money until you withdraw it later in life. For the 2024 year, you can contribute up to $23,000 annually.
What it costs you
The money is taken directly from your pay through payroll deductions. To use this, your employer must have already set up the plan at your workplace.
The catch to know
Many employers offer a "match," where they contribute additional money to your account based on how much you put in. If you do not contribute enough to get the full match, you are missing out on extra money that your employer provides for your retirement.
How to apply
- Check with your employer to see if they offer a retirement plan.
- Contact your human resources department to enroll.
- Decide how much of your paycheck you want to contribute.
- Monitor your contributions and employer matching through your company's benefits portal.
For more information, visit https://www.irs.gov/retirement-plans/plan-sponsor/401k-plan