401K is the program that allows workers of corporations to contribute to their retirement. The money is automatically taken out of pay checks and put into a 401K account. The corporation generally decides where the money will be placed. An investment source that is used most often is a mutual fund. A certain percentage of the pay check is deducted and contributed to the persons 401K.
Another innovative benefit to a 401K is that the corporation will make a matching deposit to the employees 401K. They can match all or part of the employee’s contribution. Another option for this plan can be to purchase company stock in lieu of mutual funds. The Roth provision was added to the innovations in 2006 so that participants can have some or even all of the contributions put into a separate Roth account.