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What is a 401k and how does it work?
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A 401k is a retirement savings plan that allows you to save money before taxes are taken out. It is typically offered by employers as an employee benefit, allowing employees to set aside a portion of their salary before taxes are taken out. Contributions can be made from both the employer and the employee, with the employer usually matching a certain percentage of the employee's contribution up to a certain amount. The contributions are then invested in stocks, bonds, mutual funds, or other investments, which grow over time and provide tax-deferred growth. Upon retirement, withdrawals from the account may be taxed at your current income tax rate.