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Investments

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 These contributions and any earnings from the 401(k) investments are not taxed until they are withdrawn.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 Pennsylvania, as in other states, an employer 401(k) plan is a popular retirement savings vehicle that allows employees to contribute a portion of their pre-tax salary to selected investment options, often including a variety of mutual funds. Contributions to a traditional 401(k) plan reduce an employee's taxable income in the year they are made, and the funds grow tax-deferred until they are withdrawn, typically after the employee reaches retirement age. Withdrawals are then taxed as ordinary income. Employers may also choose to match a portion of the employee contributions, further enhancing the retirement savings. The specific rules and regulations governing 401(k) plans are established by federal law, particularly under the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code. Pennsylvania state law does not significantly alter these federal regulations but does follow the federal tax treatment for 401(k) contributions and earnings.

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Investments

Employer 401(k) plan

Individual & Family Legal Plan

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Pennsylvania State Code

Pennsylvania State Code

Investments

Employer 401(k) plan

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