408(k) Plan

外汇网2021-06-19 13:54:05 61

A plan set up by an employer to help employees fund their retirement. The 408(k) plan is a simplified version of the popular 401(k) plan butis intended for smaller companies (those with fewer than 25 employees). It is also available to self-employed inpiduals. Under the plan, employees can contribute ptax dollars to the accountand thus reduce their net incomes for the year. This results in a tax savings for the contributor.

Although the term 408(k) isoften used to describean account, it actually referstothe Internal Revenue Code, whichdetails Simplified Employee Pension(SEP) accounts. The employee and the employer contribute tothis account in the employee's name. Throughout the account's lifetime,deposits are not treated as income until the funds are withdrawn.

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