De facto standard employer-sponsored retirement account.

Traditional 401(k) is what most employers offer to their employees. They are Tax-Deferred (aka “pre-tax”) accounts. Employers will often have some sort of “match” (e.g. ‘you pay 8% of your salary, we’ll throw in an additional 6%”) that they will use to incentivize you to save for retirement. Matches are typically subject to some sort of “vestment” period, meaning you have to stay with the employer for X number of years before you’re allowed to keep their match contributions.

Currently you cannot withdrawal before age 59 1/2 without paying a 10% penalty, unless you meet some exclusion. You have to start taking distributions by 70 1/2.


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