401 (k) plan

An employer-sponsored retirement plan that permits employees to divert part of their pay into the plan and avoid current taxes on that income. Money invested in the plan may be partially matched by the employer, and earnings accumulated tax-deferred until they're withdawn.

An arrangement in which an employee places pre-tax earnings, and sometimes matching employer contributions, into a tax deferred retirement account that the employer creates and maintains. The employer holds funds in trust until the employee reaches a specified age or leaves the company and rolls the account into another tax-deferred plan.