401(k) Plan Definition

A 401(k) is a defined contribution plan provided by a company so its employees can save for retirement. Employees can choose how much to contribute to their plan, and employers may offer a 401(k) match up to a certain percentage.

401(k) Plan Extended Definition

401(k) plans enable employees to set aside funds for use after retirement. Depending on the type of plan, employees can contribute to their 401(k) from their paycheck before tax or after tax.

There are several types of 401(k) plans you can offer employees, including:

• Traditional 401(k) plan
• Safe harbor 401(k) plan
• SIMPLE 401(k) plan
• Roth 401(k) plan

There are annual contribution limits for each type of plan, meaning employees can only contribute to their retirement plan up to the annual threshold. And, there are several contribution requirements (e.g., employers must contribute to safe harbor and SIMPLE 401(k) plans) and filing requirements employers need to know.

Employers can make establishing and administrating 401(k) plans easier by signing up for payroll software with seamless 401(k) integration.

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Last Updated By

Rachel Blakely-Gray | Feb 14, 2023