This is a company-sponsored retirement account to which employees can contribute income, while employers may match contributions. The name comes from the section of the tax code that was used to establish this type of plan. Employees contribute money to an individual account by signing up for automatic deductions from their paycheck.
There are two main kinds: the traditional 401(k) and the Roth 401(k). The traditional (or regular) 401(k) offers upfront tax breaks on your savings. Contributions to a Roth 401(k) are made with after-tax dollars, so you don’t get to deduct the money from that year’s taxes
