401(k): Definition & Example

401(k)

A workplace retirement account with tax advantages, often with an employer match.

A 401(k) lets you invest for retirement straight from your paycheck, before taxes (traditional) or after (Roth). Many employers match part of your contributions, which is free money you should almost always capture first. The money grows tax-advantaged until you withdraw it in retirement.

For example

If your employer matches 100% up to 4% of pay, contributing 4% instantly doubles that money before it even starts growing.

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401(k)

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