401(k) plan

Cultural Dictionary

401(k) plan definition


Retirement plans, open to employees at most large companies and many small ones. Within limits, employees can contribute to the 401(k) plan by having a designated amount of pretax dollars deducted from their paychecks. The employer often matches part of the employee's contribution. The employee pays no taxes until starting to withdraw the money, which he or she must do between the ages of fifty-nine and a half and seventy and a half. (See also Keogh plans.)

The American Heritage® New Dictionary of Cultural Literacy, Third Edition
Copyright © 2005 by Houghton Mifflin Company.
Published by Houghton Mifflin Company. All rights reserved.
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