Definition of 401k

In the US, 401k refers to a type of pension plan where a company pays an amount of money into the plan that matches the amount that an employee pays into it, with tax advantages for both. They are called 401k because that refers to the clause in tax law which governs them. Under current tax laws employees are not taxed on the money invested in their 401k. The money is only taxed once the pension saver draws down funds. In 401k plan employees can choose from a a range of funds available from the provider.

FT Articles & Analysis

No articles are associated with this term