A 401(k) plan is a retirement savings plan sponsored by an employer. It allows employees to save and invest a portion of their paycheck before taxes are deducted. Employers may also contribute to the employee’s account as part of the plan.

Eligibility to participate in a 401(k) is typically determined by the employer. Most plans require employees to be at least 21 years old and to have worked for the company for a specified period, usually one year.

For 2024, the contribution limit for employees under 50 is $23,000. Employees aged 50 or older can make an additional catch-up contribution of $7,500, for a total of $30,500.

An employer match is a contribution your employer makes to your 401(k) based on your own contributions. To maximize it, contribute at least enough to get the full match, as this is essentially free money toward your retirement savings.

Yes, contributions to a traditional 401(k) are made pre-tax, meaning they reduce your taxable income for the year. However, withdrawals in retirement are taxed as ordinary income.

Investment options typically include mutual funds, index funds, bonds, and sometimes employer stock. The specific options depend on the plan provider.

Many 401(k) plans allow participants to take loans, but there are limits. Loans are typically capped at $50,000 or 50% of your vested account balance, whichever is less. Repayment terms and interest rates vary by plan.

Hardship withdrawals allow you to withdraw funds from your 401(k) for immediate and heavy financial needs, such as medical expenses or avoiding eviction. Taxes and penalties may apply unless specific conditions are met.

You can leave your 401(k) with your former employer, roll it over to a new employer’s plan, transfer it to an IRA, or cash it out (though cashing out may result in taxes and penalties).

Yes, you can have multiple 401(k) accounts if you’ve worked for different employers. However, the annual contribution limit applies across all accounts combined.

A Safe Harbor 401(k) is a plan that avoids certain compliance tests by requiring employers to make mandatory contributions. It ensures employees receive contributions regardless of their own savings.

In a traditional 401(k), contributions are pre-tax, and withdrawals are taxed in retirement. In a Roth 401(k), contributions are made after-tax, but qualified withdrawals are tax-free.

Administrative costs vary but may include fees for plan setup, recordkeeping, compliance testing, and investment management. These costs depend on the provider and plan size.