A 401(k) is primarily designed to help people save for what?
AnswerRetirement
401(k) plans are employer-sponsored retirement savings accounts.
Money · Facts & stats
401(k) facts & stats
7 fact-checked facts about 401(k) retirement plan basics and terms, each with the reason behind it. 5 more are in today's round and join this page after it closes.
The basics
What is an 'employer match' in a 401(k)?
AnswerEmployer contributions based on what the employee contributes
Employers may add money in proportion to employee contributions.
Going deeper
In a 401(k), what does 'vesting' refer to?
AnswerWhen you fully own employer contributions
Vesting schedules determine when employer contributions become yours.
Withdrawals from a 401(k) before what age may generally face an extra 10% tax?
Answer59½
The IRS generally applies an additional 10% tax to withdrawals before age 59½, with exceptions.
A 403(b) plan is similar to a 401(k) but mainly offered by which employers?
AnswerNonprofits and public schools
403(b) plans serve employees of tax-exempt organizations and public schools.
Expert level
Who is often called the 'father of the 401(k)'?
AnswerTed Benna
Benefits consultant Ted Benna designed an early 401(k) plan around 1980.
A 457(b) plan is mainly offered to which workers?
AnswerState and local government employees
457(b) plans are deferred compensation plans for government employees.
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