401 k

When people talk about 401(k) plans, you often hear about advantages like:
    - Free money from your employer
    - Lower taxable income
    - Savings and earnings that accumulate without you having to remember to make deposits
    - The opportunity to retire and not have to worry about money anymore

Does this sound too good to be true? It isn't. It's what you can gain from investing in your company's 401(k) plan. The 401(k) is one of the most popular retirement plans around.

Although retirement plans may be the farthest thing from your mind, think about how much of a difference 10 years can make in the investing world. You'll learn about that difference in this article. If your employer offers a 401(k) plan, it makes a lot of sense to participate in it as soon as possible. If you start early, maybe when you're 25 or so, you can very likely have a million or two (or more) in your account by the time you retire.

401(k) plans are part of a family of retirement plans known as defined contribution plans. Other defined contribution plans include profit sharing plans, IRAs and Simple IRAs, SEPs, and money purchase plans. They are called "defined contribution plans" because the amount that is contributed is defined either by the employee (a.k.a. the participant) or the employer.