ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Besides, like an EPF plan, 401(k) plan contributions are tax-deferred. These plans’ contributions and investment earnings are taxed as ordinary income during withdrawal. That said, withdrawals from a 401k in India account are allowed after the employee is 59.5 years old.

Detailed explanation-2: -A 401(k) is a feature of a qualified profit-sharing plan that allows employees to contribute a portion of their wages to individual accounts. Elective salary deferrals are excluded from the employee’s taxable income (except for designated Roth deferrals). Employers can contribute to employees’ accounts.

Detailed explanation-3: -A 401(k) is an employer-sponsored retirement plan, sometimes called a defined contribution plan (in contrast to a defined benefit pension plan). It allows employees to make pre-tax contributions to the plan, up to a specified amount each year.

Detailed explanation-4: -Key Takeaways. An employee savings plan (ESP) is an employer-sponsored plan that allows you to set aside part of your paycheck for retirement, medical expenses, and other goals. The most common types of ESPs are 401(k)s and 403(b)s, but they also include 457(b)s, TSPs, HSAs, FSAs, and others.

Detailed explanation-5: -A 401(k) deferral contribution is the amount of an employee’s salary that they elect to put in an employer-sponsored retirement savings plan. The portion of the salary that is deferred is not subject to income taxes for the current year.