A 401(k) is an employer-sponsored plan where many of the employers offer a matching contribution. It has a higher contribution limit compared to IRA plans and also provided a tax advantage. You can invest in assets such as mutual funds, stocks, index funds, and real estate investment trusts.
There are different types of 401(k) plans, having different advantages and drawbacks.
Some types of the 401(k) plans are:
- Traditional 401(k)
- Self-directed plan
- Safe-harbor plan
- SIMPLE 401(k)
- Roth 401(k)
- Tiered-profit sharing plan structure
To know more about 401(k) plans read the article Joshua Kennon on The Balance.