401(k)
Also called: Roth 401(k)
An employer retirement plan you fund through payroll deductions, with traditional (pre-tax) or Roth (after-tax) contributions and tax-deferred growth.
In 2026 you can defer up to $24,500 of your pay, plus catch-up contributions from age 50. Your contributions and your employer's together are capped at $72,000, not counting catch-ups.
Traditional contributions lower your taxable income now; withdrawals in retirement are taxed as ordinary income. Roth 401(k) contributions are made with after-tax pay, and qualified withdrawals are tax-free. Withdrawals before age 59½ generally face a 10% penalty on top of income tax, with some exceptions.
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Disclaimer: Definitions are general education, not financial, tax, or legal advice. Figures are for the 2026 tax year unless noted.