401(k)
A retirement account offered by your employer. You contribute pre-tax dollars straight from your paycheck, the money grows tax-deferred, and many employers match part of your contribution — free money.
By Findley's Finance · Last reviewed: September 2026
Why it matters
The 401(k) is where most Americans build retirement wealth, and the employer match is the highest guaranteed return available anywhere: a 50% match is an instant 50% return before the market does anything. For 2026 you can defer up to $24,500 of salary into it. The money is meant to stay put until 59½ — pulling it out early usually triggers taxes plus a 10% penalty, which is why raiding it is almost always a mistake.
Concrete example
On an $80,000 salary you contribute 6% ($4,800) and your employer matches 50% of that — $2,400 of free money every year.