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How does a 401k plan work?
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A 401(k) plan is a retirement savings plan sponsored by an employer. It lets workers save and invest a piece of their paycheck before taxes are taken out. Taxes aren't paid until the money is withdrawn from the account. Most plans offer a range of investment options, such as stocks, bonds and mutual funds. A 401(k) plan may also offer features like employer matching contributions. With this option, the employer will match a portion of an employee's contributions, up to a certain percentage or dollar amount. This can increase an employee's retirement savings significantly.