Business and Personal Finance Dictionary

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• FOUR ZERO ONE 401(K) RETIREMENT PLAN
  
  401(k) retirement plans allow an individual to contribute part of their "pre-tax" income to an investment account. Pre-tax contributions are not tax-free, they are tax-deferred, meaning the person does not pay income tax on this money until they withdraw it from the plan (which should be at retirement). Some companies offer to "match" the individual's contribution as an incentive to join the company's retirement plan. Depending on the provisions of a company's retirement plan, a person may take a loan from their 401(k) account, however, not all plans allow for loans. The loan is paid back, plus interest (a fixed rate determined at the time of the loan), through after-tax payroll deductions. As long as the individual repays the loan on time, they are not subject to withholding taxes or penalties.
  
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