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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 These contributions and any earnings from the 401(k) investments are not taxed until they are withdrawn.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 Washington state, as in the rest of the United States, a 401(k) plan is a common employer-sponsored retirement savings program that allows employees to save and invest a portion of their paycheck before taxes are taken out. Contributions to a traditional 401(k) plan are made with pre-tax dollars, which means that employees do not pay income tax on the money they contribute or the earnings from their investments until they withdraw the funds, typically after retirement. 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. Employers in Washington who offer a 401(k) plan must adhere to these federal guidelines, including contribution limits, nondiscrimination testing to ensure fairness, and providing certain disclosures to plan participants. It's important for both employers and employees to understand the rules and potential tax benefits associated with 401(k) plans.

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Investments

Employer 401(k) plan

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Washington State Code

Washington State Code

Investments

Employer 401(k) plan

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