401(k)
Business & Finance abbreviation · Personal Finance
| Stands for | Employer-sponsored retirement savings plan (Internal Revenue Code section 401(k)) |
|---|---|
| Categories | Business & Finance |
401(k) stands for Employer-sponsored retirement savings plan (Internal Revenue Code section 401(k)), a personal finance abbreviation.
Workplace retirement plan that lets employees divert part of each paycheck into investments, either before income tax (traditional) or after tax (Roth), often with an employer match. Balances grow tax-deferred, and withdrawals before age 59½ usually trigger a 10% additional tax on top of regular income tax.
Example: My company matches 50% of my 401(k) contributions up to 6% of salary, so I never contribute less than that.
Usage notes
The name comes from subsection 401(k) of the Internal Revenue Code, added by the Revenue Act of 1978; benefits consultant Ted Benna designed the first plan to use it in 1980. Pronounced "four-oh-one-kay" and often typed 401k. Under the SECURE 2.0 Act, most plans established after 2022 must automatically enroll new employees beginning in 2025. Leaving a job does not forfeit your own contributions, though unvested employer money can be lost.
Related abbreviations
More personal finance abbreviations
- 401(a) – Qualified retirement plan (Internal Revenue Code section 401(a))
- 403(b) – Tax-sheltered annuity plan (Internal Revenue Code section 403(b))
- 457(b) – Deferred compensation plan (Internal Revenue Code section 457(b))
- 529 – Qualified tuition program (Internal Revenue Code section 529)
- ABLE – Achieving a Better Life Experience account
- AER – Annual equivalent rate
- APR – Annual percentage rate
- APRC – Annual percentage rate of charge
- APY – Annual percentage yield
- AU – Authorized user
- BT – Balance transfer
- CIBIL – Credit Information Bureau (India) Limited