A 401(k) Retirement Plan is an employer sponsored, tax deferred, employee retirement plan which uses pre-tax contributions from an employee's regular compensation to invest that employee in a number of possible financial instruments. In today's costly and complex 401(k) environment, there are many available alternatives for plan sponsors to choose from.
Benefits to Plan Sponsors
Is mostly funded from dollars paid by salary
Allows employers to deduct their contribution from their taxes as a business expense
Helps recruit and keep quality employees
Helps members build retirement security
Benefits to Employees
Savings through easy payroll deduction
Ability to choose the amount they want to save and change that amount to meet their current needs
Reduce their taxable income
Defer taxes on the amount saved and its earnings until the member receives benefits from the plan
