Review:
401(k) Plan
overall review score: 4.5
⭐⭐⭐⭐⭐
score is between 0 and 5
A 401(k)-plan is a retirement savings plan offered by employers to employees, allowing them to contribute a portion of their pre-tax salary into a tax-deferred investment account for retirement.
Key Features
- Employer-sponsored retirement savings plan
- Pre-tax contributions
- Tax-deferred growth on investments
- Potential employer matching contributions
Pros
- Tax benefits through pre-tax contributions and tax-deferred growth
- Potential for employer matching contributions, increasing retirement savings
- Automatic payroll deductions make saving for retirement convenient
Cons
- Limited investment options compared to individual retirement accounts (IRAs)
- Penalties for early withdrawals before age 59.5