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choose to deposit part of their earnings into a 401(k) account and not pay income tax on it until the money is later withdrawn in retirement. Interest earned on money in a 401(k) account is never taxed before funds are withdrawn.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.
Virginia Enrollment and Salary Deferral Agreement is a legal document used in the state of Virginia to establish an agreement between an employee and employer regarding enrollment in certain benefits programs and salary deferral options. This agreement allows employees to take part in various benefits provided by their employer and defer a portion of their salary for specified purposes. The Virginia Enrollment and Salary Deferral Agreement covers multiple facets of employment and financial planning, and it offers employees the flexibility to choose among different agreement types based on their needs. Here are some common types: 1. Retirement Savings Agreement: This type of agreement enables employees to defer a portion of their salary into retirement savings accounts, such as 401(k) plans or individual retirement accounts (IRAs), allowing them to save for their future while enjoying potential tax advantages. 2. Health Savings Agreement: With this agreement, employees can set aside part of their salary into a Health Savings Account (HSA), which can be used to cover qualified medical expenses not covered by insurance. Has come with tax advantages, including contributions deducted from taxable income. 3. Flexible Spending Agreement: This agreement permits employees to allocate a portion of their salary into a Flexible Spending Account (FSA), specifically for qualified medical expenses, dependent care expenses, or other eligible expenses. FSA's allow for pre-tax contributions, reducing an employee's overall taxable income. 4. Education Savings Agreement: This type of agreement enables employees to contribute a portion of their salary towards a 529 plan or similar education savings accounts, providing a tax-advantaged way to save for their children's or their own future education expenses. 5. Deferred Compensation Agreement: This agreement allows employees to defer a portion of their salary for a specific period, often to be paid out at a later date, such as after retirement or upon reaching a milestone. Deferred compensation plans may provide tax deferral benefits and can help employees manage their income more effectively. In summary, the Virginia Enrollment and Salary Deferral Agreement is a comprehensive legal document that allows Virginia employees to choose from various agreement types to participate in benefits programs and defer a portion of their salary for different purposes. These agreements provide employees with financial planning opportunities, tax advantages, and the ability to customize their compensation packages to suit their specific needs and goals.Virginia Enrollment and Salary Deferral Agreement is a legal document used in the state of Virginia to establish an agreement between an employee and employer regarding enrollment in certain benefits programs and salary deferral options. This agreement allows employees to take part in various benefits provided by their employer and defer a portion of their salary for specified purposes. The Virginia Enrollment and Salary Deferral Agreement covers multiple facets of employment and financial planning, and it offers employees the flexibility to choose among different agreement types based on their needs. Here are some common types: 1. Retirement Savings Agreement: This type of agreement enables employees to defer a portion of their salary into retirement savings accounts, such as 401(k) plans or individual retirement accounts (IRAs), allowing them to save for their future while enjoying potential tax advantages. 2. Health Savings Agreement: With this agreement, employees can set aside part of their salary into a Health Savings Account (HSA), which can be used to cover qualified medical expenses not covered by insurance. Has come with tax advantages, including contributions deducted from taxable income. 3. Flexible Spending Agreement: This agreement permits employees to allocate a portion of their salary into a Flexible Spending Account (FSA), specifically for qualified medical expenses, dependent care expenses, or other eligible expenses. FSA's allow for pre-tax contributions, reducing an employee's overall taxable income. 4. Education Savings Agreement: This type of agreement enables employees to contribute a portion of their salary towards a 529 plan or similar education savings accounts, providing a tax-advantaged way to save for their children's or their own future education expenses. 5. Deferred Compensation Agreement: This agreement allows employees to defer a portion of their salary for a specific period, often to be paid out at a later date, such as after retirement or upon reaching a milestone. Deferred compensation plans may provide tax deferral benefits and can help employees manage their income more effectively. In summary, the Virginia Enrollment and Salary Deferral Agreement is a comprehensive legal document that allows Virginia employees to choose from various agreement types to participate in benefits programs and defer a portion of their salary for different purposes. These agreements provide employees with financial planning opportunities, tax advantages, and the ability to customize their compensation packages to suit their specific needs and goals.
