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{{Short description|Type of U.S. retirement/pension plan}}
In the United States, a '''401(k)''' (pronounced four-oh-one-kay) plan is an employer-sponsored, [[defined contribution|defined-contribution]], personal [[pension]] (savings) account, as defined in subsection 401(k) of the U.S. [[Internal Revenue Code]].<ref name="cornell" /> Periodic employee contributions come directly out of their paychecks, and may be [[Employer matching program|matched by the employer]]. This legal option is what makes 401(k) plans attractive to employees, and many employers offer this option to their (full-time) workers.
There are two types: traditional and [[Roth 401(k)]]. For Roth accounts, contributions and withdrawals have no impact on income tax. For traditional accounts, contributions may be deducted from taxable income and withdrawals are added to taxable income. There are limits to contributions,<ref>{{Cite web|url=https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-401k-and-profit-sharing-plan-contribution-limits|title=Retirement Topics 401k and Profit Sharing Plan Contribution Limits {{!}} Internal Revenue Services|website=irs.gov|language=en|access-date=2018-04-15}}</ref> rules governing withdrawals and possible penalties.
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