human
Can you explain how a 401(k) works?
assistant
A 401(k) is an employer-sponsored retirement savings plan that allows employees to contribute a portion of their salary before taxes are taken out. The money saved in the 401(k) account grows tax deferred, meaning it will not be taxed until it is withdrawn from the plan at retirement. Additionally, employers may match some or all of the employee's contributions up to a certain percentage. This can significantly increase the amount of money available for retirement savings.