What is 401(k)?
<p>A 401(k) is a retirement savings plan sponsored by an employer. It lets workers save and invest a portion of their paychecks before taxes are taken out. Taxes aren’t paid until the money is withdrawn from the account.</p>
<p>Employers may offer to match employee contributions, providing an additional benefit for employees who participate in the plan.</p>
<p>Contributions to a 401(k) are limited to $19,500 in 2021 for individuals under age 50 or $26,000 for those over 50 years old (with catch-up contributions). Employers may also set limits on how much employees can contribute each year.</p>
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