What's a 401 (k)? Get the most from your workplace retirement plan. A 401 (k) is a retirement savings plan that lets you invest a portion of each paycheck before taxes are deducted depending on the type of contributions made.
What is a business owner's 401(k) plan?
It's a traditional 401 (k) plan covering a business owner with no employees, or that person and his or her spouse. These plans have the same rules and requirements as any other 401 (k) plan. The business owner wears two hats in a 401 (k) plan: employee and employer. Contributions can be made to the plan in both capacities.
What is a one-participant 401(k) plan?
The one-participant 401 (k) plan isn't a new type of 401 (k) plan. It's a traditional 401 (k) plan covering a business owner with no employees, or that person and his or her spouse. These plans have the same rules and requirements as any other 401 (k) plan. The business owner wears two hats in a 401 (k) plan: employee and employer.
What are the tax advantages of a 401(k) plan?
The 401 (k) plan was designed by Congress to encourage Americans to save for retirement. Among the benefits they offer is tax savings. There are two main options, each with distinct tax advantages: A traditional 401 (k) is deducted from the employee's gross income.
