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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 Wyoming, as in all states, a 401(k) plan is governed by federal law, specifically the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code. Employees in Wyoming can elect to defer a portion of their salary into their 401(k) plan, which is then excluded from their taxable income for the year, except for contributions to a Roth 401(k), 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 Upon retirement, or when the employee takes distributions from the plan, the amounts withdrawn, including any earnings, are subject to income tax, unless the distributions are from a Roth account and meet the criteria for a qualified distribution. It's important to note that while the specifics of 401(k) plans are federally regulated, state laws regarding probate, creditor protection, and divorce can impact how 401(k) assets are treated in those situations.

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Employment law

retirement plans—401k plans

Individual & Family Legal Plan

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Wyoming State Code

Wyoming State Code

Employment law

retirement plans—401k plans

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