A 401(k) is a type of retirement savings account in the United States, which takes its name from subsection 401(k) of the Internal Revenue Code (Title 26 of the United States Code). A contributor can begin to withdraw funds after reaching the age of 59 1/2 years. 401(k)s were first widely adopted as retirement plans for American workers, beginning in the 1980s. The 401(k) emerged as an alternative to the traditional retirement pension, which was paid by employers. Employer contributions with the 401(k) can vary, but in general the 401(k) had the effect of shifting the burden for retirement savings to workers themselves. In 2011, about 60% of American households nearing retirement age have 401(k)-type accounts .
Employers can help their employees save for retirement while reducing taxable income under this provision, and workers can choose to deposit part of their earnings into a 401(k) account and not pay income tax on it until the money is later withdrawn in retirement. Interest earned on money in a 401(k) account is never taxed before funds are withdrawn. Employers may choose to, and often do, match contributions that workers make. The 401(k) account is typically administered by the employer, while in the usual "participant-directed" plan, the employee may select from different kinds of investment options. Employees choose where their savings will be invested, usually, between a selection of mutual funds that emphasize stocks, bonds, money market investments, or some mix of the above. Many companies' 401(k) plans also offer the option to purchase the company's stock. The employee can generally re-allocate money among these investment choices at any time. In the less common trustee-directed 401(k) plans, the employer appoints trustees who decide how the plan's assets will be invested.
Puerto Rico Enrollment and Salary Deferral Agreement, also known as the Puerto Rico Retirement Plan, is a legal document that outlines the terms and conditions of participating in a retirement program in Puerto Rico. This agreement allows employees to defer a portion of their salary, which will be deposited into a retirement account in order to supplement their income during retirement. There are several types of Puerto Rico Enrollment and Salary Deferral Agreements available, each tailored to meet the specific needs of different individuals. These include: 1. Individual Retirement Accounts (IRAs): This type of agreement allows employees to contribute a portion of their salary on a pre-tax basis into an individual retirement account. The funds in the account then grow tax-deferred until retirement, at which point they can be withdrawn. 2. 401(k) Plans: Similar to IRAs, 401(k) plans enable employees to defer a percentage of their salary on a pre-tax basis. These contributions are typically invested in a variety of investment options, such as mutual funds or stocks, allowing for potential growth over time. Employers may also provide matching contributions to the account. 3. 403(b) Plans: These plans are specifically designed for employees of certain tax-exempt organizations, such as schools, hospitals, and non-profit organizations. Like 401(k) plans, employees can defer a portion of their salary on a pre-tax basis, and employers may offer matching contributions as well. 4. 457 Plans: Typically offered to government employees and certain non-profit organizations, 457 plans allow participants to defer a portion of their salary on a pre-tax basis. These plans offer greater flexibility in terms of contribution limits and withdrawal options. 5. Defined Benefit Plans: Unlike defined contribution plans like IRAs, 401(k), 403(b), and 457 plans, defined benefit plans guarantee a specific income during retirement, based on factors such as salary, years of service, and age. These plans are typically offered by government agencies and certain private sector employers. In conclusion, the Puerto Rico Enrollment and Salary Deferral Agreement provides employees with various retirement plan options, such as IRAs, 401(k) plans, 403(b) plans, 457 plans, and defined benefit plans. These agreements are essential in helping individuals secure their financial future by deferring a portion of their salary to supplement their income during retirement.Puerto Rico Enrollment and Salary Deferral Agreement, also known as the Puerto Rico Retirement Plan, is a legal document that outlines the terms and conditions of participating in a retirement program in Puerto Rico. This agreement allows employees to defer a portion of their salary, which will be deposited into a retirement account in order to supplement their income during retirement. There are several types of Puerto Rico Enrollment and Salary Deferral Agreements available, each tailored to meet the specific needs of different individuals. These include: 1. Individual Retirement Accounts (IRAs): This type of agreement allows employees to contribute a portion of their salary on a pre-tax basis into an individual retirement account. The funds in the account then grow tax-deferred until retirement, at which point they can be withdrawn. 2. 401(k) Plans: Similar to IRAs, 401(k) plans enable employees to defer a percentage of their salary on a pre-tax basis. These contributions are typically invested in a variety of investment options, such as mutual funds or stocks, allowing for potential growth over time. Employers may also provide matching contributions to the account. 3. 403(b) Plans: These plans are specifically designed for employees of certain tax-exempt organizations, such as schools, hospitals, and non-profit organizations. Like 401(k) plans, employees can defer a portion of their salary on a pre-tax basis, and employers may offer matching contributions as well. 4. 457 Plans: Typically offered to government employees and certain non-profit organizations, 457 plans allow participants to defer a portion of their salary on a pre-tax basis. These plans offer greater flexibility in terms of contribution limits and withdrawal options. 5. Defined Benefit Plans: Unlike defined contribution plans like IRAs, 401(k), 403(b), and 457 plans, defined benefit plans guarantee a specific income during retirement, based on factors such as salary, years of service, and age. These plans are typically offered by government agencies and certain private sector employers. In conclusion, the Puerto Rico Enrollment and Salary Deferral Agreement provides employees with various retirement plan options, such as IRAs, 401(k) plans, 403(b) plans, 457 plans, and defined benefit plans. These agreements are essential in helping individuals secure their financial future by deferring a portion of their salary to supplement their income during retirement.
Para su conveniencia, debajo del texto en español le brindamos la versión completa de este formulario en inglés. For your convenience, the complete English version of this form is attached below the Spanish version.
