Definition

A 401(k) lets you invest part of each paycheck for retirement with tax advantages, and many employers match a portion of contributions. A traditional 401(k) reduces taxable income now and is taxed at withdrawal; a Roth 401(k) is funded with after-tax money and grows tax-free. Annual contribution limits are set by the IRS and rise periodically.

1. How Much Should You Have Saved for Retirement by Age?

   Retirement savings benchmarks by age give you a reference point for whether you are on track — but the right number depends more on your specific income and expenses than on your age.
   retirement

1. Employer Match

   Money your employer adds to your 401(k) based on what you contribute.
2. Roth 401(k)

   A 401(k) funded with after-tax money that grows and is withdrawn tax-free in retirement.
3. Vesting

   The schedule by which employer contributions or equity become fully yours.