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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 These contributions and any earnings from the 401(k) investments are not taxed until they are withdrawn.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 Kansas, as in all states, employer 401(k) plans are governed by federal law, specifically the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code. Employers who offer a 401(k) plan provide their employees with a selection of investment options, which often include a variety of mutual funds. Employees can elect to defer a portion of their salary on a pre-tax basis into their chosen investments within the 401(k) plan. The contributions made to the 401(k) plan, as well as any investment earnings, are tax-deferred, meaning they are not subject to income tax until the employee withdraws the funds, typically upon retirement. It's important for employees to understand the rules regarding contribution limits, withdrawal regulations, and potential penalties for early withdrawal. While the state of Kansas does not have specific laws that alter the federal regulations of 401(k) plans, employers operating within Kansas must comply with the federal guidelines to ensure the tax-advantaged status of their 401(k) plans.

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Employer 401(k) plan

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Employer 401(k) plan

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