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choose to deposit part of their earnings into a 401(k) account and not pay income tax on it until the money is later withdrawn in retirement. Interest earned on money in a 401(k) account is never taxed before funds are withdrawn.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.
The West Virginia Enrollment and Salary Deferral Agreement is a contractual arrangement that allows individuals to voluntarily defer a portion of their salary to fund retirement benefits or other specified purposes. This agreement is designed to provide eligible employees in West Virginia with the opportunity to save for their future financial needs. One type of West Virginia Enrollment and Salary Deferral Agreement is the Retirement Salary Deferral Agreement. This agreement enables employees to defer a portion of their salary into a retirement account, such as a 401(k) or 403(b) plan, allowing for tax advantages and long-term savings growth. By participating in this type of salary deferral agreement, employees can effectively contribute towards their retirement income while potentially reducing their taxable income in the current year. Another type of West Virginia Enrollment and Salary Deferral Agreement is the Health Savings Account (HSA) Salary Deferral Agreement. This arrangement allows employees to set aside a portion of their salary into an HSA, which is a tax-advantaged account used to cover qualified medical expenses. By deferring a portion of their salary into an HSA, employees can benefit from tax deductions, tax-free growth on contributions, and the flexibility to use the funds for eligible medical expenses. Furthermore, there may be other variations of West Virginia Enrollment and Salary Deferral Agreements depending on a particular employer's benefits program. These agreements could encompass different purposes such as funding educational expenses, purchasing life insurance, or contributing to flexible spending accounts (FSA) for dependent care or medical expenses. In summary, the West Virginia Enrollment and Salary Deferral Agreement provides employees with valuable opportunities to voluntarily defer a portion of their salary towards retirement savings, health-related expenses, and other specified purposes. These agreements aim to support employees in better managing their finances, securing their future, and addressing various financial needs.
