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Employer 401(k) plan

An employer 401(k) plan is an employer-sponsored retirement savings plan that gives employees a choice of investment options—typically mutual funds. Employees who participate in a traditional 401(k) plan have a portion of their pre-tax salary invested directly in the option or options they choose. These contributions and any earnings from the 401(k) investments are not taxed until they are withdrawn.

In Indiana, as in other states, an employer 401(k) plan is a retirement savings program that is sponsored by an employer and allows employees to save and invest for their own retirement on a tax-deferred basis. Employees can choose to contribute a portion of their pre-tax salary to their 401(k) plan, which can be invested in a variety of investment options, usually mutual funds. The contributions made to the 401(k) plan, as well as any earnings or gains from the investments, are not subject to federal or state income tax until the employee withdraws the money, typically after reaching retirement age. Federal law, specifically the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code, governs the operation of 401(k) plans, including setting limits on contributions, providing protections for employees, and establishing rules for withdrawals. Indiana does not have specific state statutes that alter the federal regulation of 401(k) plans, so the federal guidelines are the primary regulations that employers and employees in Indiana must follow.

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Employer 401(k) plan

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Indiana State Code

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Employer 401(k) plan

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