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Benefits Beginner: Introduction to 401(k) Plans

Introduction to 401(k) Plans Making Contributions to a 401(k) Plan 401(k) Plan Contribution Requirements 401(k) Plan Distribution Requirements Other Types of 401Ks: Starter, Solo, and SIMPLE The Roth 401(k) 401(k) Rollovers Types of 401(k) Rollovers Summary of 401(k) Plans
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Introduction to 401(k) Plans

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Learn about the 401(k), a staple among retirement plans. This tutorial covers contributions, distributions, and the Roth version.

What you will learn

  • Making Contributions to a 401(k) Plan
  • 401(k) Plan Contribution Requirements
  • 401(k) Plan Distribution Requirements
  • Other Types of 401Ks: Starter, Solo, and SIMPLE
  • The Roth 401(k)
  • 401(k) Rollovers
  • Types of 401(k) Rollovers

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Introduction to 401(k) Plans

The Revenue Act of 1978 created new retirement options for employee benefit plans. Under section 401(k) of the Internal Revenue Code, employers may offer their employees the option of taking cash payments currently or deferring the cash until retirement. Employees may also elect to defer current income to the plans on a pre-tax basis. This simply means that the employees can invest money into the plans before the money is taxed, thereby making it tax-free for the present. Employees can save thousands of dollars each year by choosing this option. Some plans also allow employees to make after-tax contributions to a savings plan. Profit sharing plans, savings plans, and stock bonus plans may include provisions for 401(k)s.