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Publication Date: April 2008
Publisher: National Center for Policy Analysis (U.S.)
Author(s): Pamela Villarreal; Robert Reeves
Research Area: Economics; Labor
Keywords: retirement; 401k retirement
Type: Brief
Abstract:
The popularity of 401(k) plans has grown in recent years. According to the Employee Benefits Research Institute, almost two-thirds of employers offer such plans and millions of employees now contribute to them. These defined contribution plans allow workers to set aside part of their earnings in tax-deferred retirement accounts that are invested in stock and bond funds. A worker can begin to withdraw funds from the account without penalty at age 59 and one-half. All contributions, as well as accumulated dividends and interest, are subject to income tax when the funds are withdrawn.