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choose to deposit part of their earnings into a 401(k) account and not pay income tax on it until the money is later withdrawn in retirement. Interest earned on money in a 401(k) account is never taxed before funds are withdrawn.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.
Connecticut Enrollment and Salary Deferral Agreement, also known as the Connecticut 457 Plan, is a voluntary retirement savings program available to eligible employees of the state government, municipalities, and certain non-profit organizations in the state of Connecticut. The Connecticut 457 Plan allows employees to contribute a portion of their pre-tax salary to a retirement account, which can help them build a nest egg for their post-employment years. The contributions made to this plan are tax-deferred, meaning they are deducted from the employee's gross income, reducing their taxable income and potentially resulting in lower overall taxes. The plan offers various investment options, allowing participants to choose how their contributions are invested. These options may include a range of mutual funds, stocks, bonds, and other investment vehicles, offering flexibility and diversification. One of the significant advantages of the Connecticut 457 Plan is its portability. Participants can maintain their retirement account even if they change employers or leave the state's employment system. Additionally, the plan allows for catch-up contributions for those aged 50 or older, enabling them to accelerate their savings as retirement approaches. Furthermore, the Connecticut 457 Plan provides participants with the option to make additional contributions through a Roth 457 account. Unlike traditional pre-tax contributions, Roth 457 contributions are made with after-tax money. These contributions grow tax-free, and qualified withdrawals in retirement are also tax-free. Different types of Connecticut Enrollment and Salary Deferral Agreements include the Traditional 457 Plan, which offers pre-tax contributions and potential tax savings, and the Roth 457 Plan, which provides tax-free growth and withdrawals. Participants can choose between these two options based on their individual financial goals and circumstances. In summary, the Connecticut Enrollment and Salary Deferral Agreement, or the Connecticut 457 Plan, is a retirement savings program available to eligible employees in the state. It allows participants to defer a portion of their salary into a tax-advantaged account, providing them with the opportunity to build a secure financial future during their working years and beyond.Connecticut Enrollment and Salary Deferral Agreement, also known as the Connecticut 457 Plan, is a voluntary retirement savings program available to eligible employees of the state government, municipalities, and certain non-profit organizations in the state of Connecticut. The Connecticut 457 Plan allows employees to contribute a portion of their pre-tax salary to a retirement account, which can help them build a nest egg for their post-employment years. The contributions made to this plan are tax-deferred, meaning they are deducted from the employee's gross income, reducing their taxable income and potentially resulting in lower overall taxes. The plan offers various investment options, allowing participants to choose how their contributions are invested. These options may include a range of mutual funds, stocks, bonds, and other investment vehicles, offering flexibility and diversification. One of the significant advantages of the Connecticut 457 Plan is its portability. Participants can maintain their retirement account even if they change employers or leave the state's employment system. Additionally, the plan allows for catch-up contributions for those aged 50 or older, enabling them to accelerate their savings as retirement approaches. Furthermore, the Connecticut 457 Plan provides participants with the option to make additional contributions through a Roth 457 account. Unlike traditional pre-tax contributions, Roth 457 contributions are made with after-tax money. These contributions grow tax-free, and qualified withdrawals in retirement are also tax-free. Different types of Connecticut Enrollment and Salary Deferral Agreements include the Traditional 457 Plan, which offers pre-tax contributions and potential tax savings, and the Roth 457 Plan, which provides tax-free growth and withdrawals. Participants can choose between these two options based on their individual financial goals and circumstances. In summary, the Connecticut Enrollment and Salary Deferral Agreement, or the Connecticut 457 Plan, is a retirement savings program available to eligible employees in the state. It allows participants to defer a portion of their salary into a tax-advantaged account, providing them with the opportunity to build a secure financial future during their working years and beyond.
