In the United States, a 401(a) plan is a tax-deferred retirement savings plan defined by subsection 401(a) of the Internal Revenue Code.[1] The 401(a) plan is established by an employer, and allows for contributions by the employer or both employer and employee.[2] Contribution amounts, whether dollar-based or percentage-based, eligibility, and vesting schedule are all determined by the sponsoring employer.[3]

These plans are available to some employees of the government, educational institutions, and non-profits, and their funds can be rolled over to a different qualified retirement plan, such as a 401(k)[4] or IRA,[5] when changing jobs. Employer contributions are mandatory, while employees are not necessarily required to contribute to the plan.[6] Early withdrawals from the plan are permitted, but they may be subject to a penalty.[7]

See alsoEdit

ReferencesEdit

  1. ^ "26 U.S. Code § 401 - Qualified pension, profit-sharing, and stock bonus plans". Legal Information Institute, Cornell University Law School.
  2. ^ "What Is 401(a) Retirement Plan?". Zacks.com. Retrieved 2021-04-25.
  3. ^ "What Is a 401(a) Plan and How Does It Work?". TheStreet.com. Retrieved 2021-04-25.
  4. ^ "Rolling Over Your 401(k)". Due.com. Retrieved 2021-04-25.
  5. ^ "The 401(a) Plans and Rollover Rules (what you need to know)". GoodFinancialCents. 23 May 2017. Retrieved 2021-04-25.
  6. ^ "401(A) PLAN". RetirementPlanAdvisors. Retrieved 2021-04-25.
  7. ^ "401(a) Plan". Investopedia. Retrieved 2017-09-24.

External linksEdit