Which retirement vehicle is a common employer-sponsored plan for employee savings?

Which retirement vehicle is a common employer-sponsored plan for employee savings?

• A. 401(k)
• B. IRA
• C. Pension
• D. Keogh

Answer: (A)

A 401(k) plan is the common employer-sponsored retirement vehicle for employee savings. It’s a defined-contribution plan offered by many employers in the private sector, where employees elect to defer a portion of their salary into the plan, often on a pre-tax basis. The money grows tax-deferred, and employers frequently provide matching contributions, which enhances the savings potential and makes it a standard benefit in many workplaces. Plans are also portable, so you can take the balance with you when you change jobs. The IRA is an individual retirement account funded by the person, not directly by an employer. A pension is a defined-benefit plan that promises a specific payout in retirement, which is less common today compared to 401(k) plans. A Keogh plan is designed for self-employed individuals or certain small businesses and is not the typical employer-sponsored option for regular employees.

A 401(k) plan is the common employer-sponsored retirement vehicle for employee savings. It’s a defined-contribution plan offered by many employers in the private sector, where employees elect to defer a portion of their salary into the plan, often on a pre-tax basis. The money grows tax-deferred, and employers frequently provide matching contributions, which enhances the savings potential and makes it a standard benefit in many workplaces. Plans are also portable, so you can take the balance with you when you change jobs.

The IRA is an individual retirement account funded by the person, not directly by an employer. A pension is a defined-benefit plan that promises a specific payout in retirement, which is less common today compared to 401(k) plans. A Keogh plan is designed for self-employed individuals or certain small businesses and is not the typical employer-sponsored option for regular employees.