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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 These contributions and any earnings from the 401(k) investments are not taxed until they are withdrawn.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 Michigan, as in all states, an employer 401(k) plan is 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 pre-tax salary to be invested in these options. The contributions made to a traditional 401(k) plan, along with any investment earnings, are tax-deferred, meaning they are not subject to federal or state income tax until the employee withdraws the funds, typically upon retirement. It's important for both employers and employees in Michigan to understand the rules and regulations set forth by ERISA and the IRS to ensure compliance and to maximize the benefits of participating in a 401(k) plan.

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Investments

Employer 401(k) plan

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Michigan State Code

Investments

Employer 401(k) plan

Michigan State Code

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