401(k)

Rare card · No. 72746

In the United States, a 401(k) plan is an employer-sponsored defined-contribution personal pension (savings) account, as defined in subsection 401(k) of the U.S. Internal Revenue Code. Periodic employee contributions come directly out of their paychecks, and may be matched by the employer. This pre-tax option is what makes traditional 401(k) plans attractive to employees, and many employers offer this option to their full-time workers. 401(k) payable is a general ledger account that contains the amount of 401(k) plan pension payments that an employer has an obligation to remit to a pension plan administrator. This account is classified as a payroll liability, since the amount owed should be paid within one year. There are two types of 401(k) plans: traditional and Roth. For traditional accounts, contributions may be deducted from taxable income and withdrawals are added to taxable income. For Roth accounts, contributions and withdrawals have no impact on income tax due to contributions...

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