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401(k)

The 401(k) account is the common name in the United States for the tax qualified defined contribution pension plan account and takes its name from subsection 401(k) of the Internal Revenue Code (Title 26 of the United States Code). 401(k) are “defined contribution plans” with annual contributions limited, currently, to $17,500. Contributions are “tax-deferred”—deducted from paychecks before taxes and then taxed when a withdrawal is made from the 401(k) account.

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