Summary of 401(k) Plans

The 401(k) is a very popular retirement plan because, except for the new starter 401(k), both employers and employees can contribute without taxation to the employee until funds are withdrawn. It has become popular with employers who want to offer retirement benefits but who cannot afford a traditional defined-benefit plan.

There are many variations on the 401(k) plan formula that make the plan flexible enough for almost any employer. These variations include starter, solo, and SIMPLE plans. The plan distribution options also make it very attractive to employees who may or may not remain with the same employer until retirement age.