Investor Glossary-401(k) planInvestor Glossary-401(k) planInvestor Glossary-401(k) planInvestor Glossary-401(k) planInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

401(k) Plan

The HTML to link to this page
 

A 401(k) plan is a deferred compensation plan used for retirement. Employers place a specified portion of an employee's wages in a 401(k) plan at the employee's request. The employee's contributions to the 401(k) plan may earn additional income through investment vehicles, including stocks, bonds, and mutual funds. Furthermore, some employers will match part of an employee's contribution to a 401(k) plan. A benefit of a 401(k) plan is that employees do not have to pay income tax on contributions to their 401(k) plan until they start receiving distributions in retirement. Employees who prematurely withdraw funds from their 401(k) plan before reaching 59 years old will incur a 10% early distribution penalty, except in cases of extreme hardship such as death, disability, or medical expenses exceeding 7.5% of adjusted gross income. Employers may establish a 401(k) plan themselves or enlist the aid of a financial organization such as a bank or insurance company. Generally, assets of a 401(k) plan are held in trust and one or more trustees handle all contributions, investments, and distributions related to the plan.



Rate this 401(k) Plan definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: in escrow, wholly-owned subsidiary, risk management, phantom income, class C shares, deferred tax, minority interest, 1031 exchange, command economy, stock market close, VIX, 144a, average price per share, cancelled check, deferred revenue, 401a, 1035 exchange, EBITDA, required rate of return, debt service coverage, option premium, current ratio, margin rate, open position, limit order, reverse mortgage, FICO score, Zero Cost Collar, covered put, ex-dividend, FTSE, real GDP, liquidity ratio, LIBOR, labor relations, balance sheet, implied volatility, Key Rate Duration, irrevocable trust, diluted share, quality assurance, retained earnings, stock split, inflation, APR, ex-dividend date, dividends payable, annual return, per diem


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Home | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use