A 401(k) is an employer-sponsored retirement account. It allows an employee to dedicate a percentage of their pre-tax salary to a retirement account. These funds are invested in a range of vehicles like stocks, bonds, mutual funds, and cash.
Some of the Pros and Cons of Investing in a 401(k) Retirement Plan at Work as per Laura Adams on Quickanddirtytips are
Pros of investing in a 401(k) retirement plan at work
- Having federal legal protection
- Getting matching funds
- Having a high annual contribution limit
- Getting free investing advice
Cons of investing in a 401(k) retirement plan at work
- You may have limited investment options
- You may have higher account fees
- You must pay fees on early withdrawals