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Employment law

retirement plans—401k plans

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 Oklahoma, 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 Oklahoma can elect to defer a portion of their salary into their 401(k) accounts, which reduces their taxable income for the year, except in the case of Roth 401(k) contributions, which are taxed upfront. Employers have the option to make contributions to their employees' 401(k) accounts, which can be matched up to a certain percentage. Upon retirement, the distributions from a traditional 401(k) account are taxed as ordinary income, while qualified distributions from a Roth 401(k) are tax-free, as taxes have already been paid on the contributions. It's important to note that while the state of Oklahoma may have its own tax rules, the fundamental regulations of 401(k) plans are consistent across the United States due to their federal basis.

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Employment law

retirement plans—401k plans

Individual & Family Legal Plan

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Oklahoma State Code

Oklahoma State Code

Employment law

retirement plans—401k plans

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