A 401(k) is a feature of a qualified profit-sharing plan that allows employees to contribute a portion of their wages to individual accounts. Some of the key features of 401k plans are:

• Elective salary deferrals are excluded from the employee’s taxable income (except for designated Roth deferrals).

• Employers can contribute to employees’ accounts.

• Distributions—including earnings—are includible in taxable income at retirement (except for qualified distributions of designated Roth accounts).

In North Dakota, as in all states, 401(k) plans are governed by federal law, specifically the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code. Employees in ND can contribute a portion of their wages to their 401(k) accounts before taxes are deducted, which reduces their taxable income. These elective deferrals help employees save for retirement by investing in various options offered within the plan. Employers also have the option to make contributions to their employees' 401(k) accounts, which can be in the form of matching contributions, non-elective contributions, or profit-sharing contributions. Upon retirement or when the employee is eligible to take distributions, the money withdrawn from a traditional 401(k) account, including the earnings, is subject to income tax. However, distributions from a designated Roth 401(k) account may be tax-free if they are qualified distributions. It's important to note that while the state of North Dakota may have state tax implications for retirement income, the primary regulations for 401(k) plans are at the federal level.