Finance Dictionary
401(k)
A US employer-sponsored retirement savings plan where contributions are pre-tax (reducing current taxable income), grow tax-deferred, and are taxed on withdrawal. 2024 limit: $23,000/year + employer match.
Example
Contributing $10,000/year to 401(k) with 6% employer match = $16,000/year invested, saving ~$3,000 in taxes annually.