401(k) retirement plan got its name from section of Internal revenue code are offered by some employers in United States.
Tax benefit
The largest benefit of 401(k) plan is contribution is based on pre tax basis. There is no need for you to pay any tax on the money that is contributed to the plan on that month .you will get the interest on that money. However you have to pay the tax when you withdraw the money as you do it for an ordinary income.
The employer match
Some companies offer benefits like contributing additional money into your plan, which matches a portion of your contribution. while Some employers match dollar-for-dollar up to a certain percentage of pay .however the company may ask you to work for that employer for certain length of time before withdrawing the money .
Investment choices
This plan helps you to invest money for retirement in numerous ways like mutual fund, bond market, guaranteed investment pools, company stocks etc..These plans provide you various investment options, which help you to create suitable retirement portfolio.
Withdrawals
The money can be withdrawn from the 401 (k) retirement plan on occasions such as termination of employment, disability, reaching the age of 55 ½, retirement or death .if the money is withdrawn before the age of 55 ½ then the IRS will issue a 10 % early withdrawal penalty. You can also take loan from your contributions. However you should repay the money.