Definition of 408(k) Plan

Plans set up by a company to help workers finance their pension. The 408(k) plan is a simple edition of the popular 401(k) plan but is designed for more compact companies (those with lower than 25 employees).

It is also available to self-employed individuals. Under the plan, workers can play role pretax dollars to the consideration and thus reduce their net earnings for the year.
Although the term 408(k) is often used to explain a Forex consideration, it actually represents the Internal Revenue Rule, which details Simplified Employee Pension records. The staff member and the company play a role to this consideration in the worker’s name. Throughout the account’s life-time, remains are neglected as income until the resources are removed. This results in a tax benefits for the factor. 408k plan is a pension strategy just like a 401k but meant to fulfill the needs of more compact companies who want to offer a pension benefit to their workers. While most conventional for-profit organizations consider providing a 401k pension strategy a necessary advantage to draw in and keep excellent workers, many more compact organizations may not discover it possible do provide such a large-scale pension strategy.

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