If you create a 401K retirement plan when you are younger, it is more advantageous than later in life. The 401(k) plan contributor can withdraw funds after reaching 59½ years old.
The IRS came up with the idea and finally proposed the very regulations that started the 401k program on it's way on November10, 1981.
The idea to create a 401k retirement plan has not been the perfect solution because not enough people put enough money into it.
An article in the Wall Street Journal of Feb., 2011 says:
"The median household headed by a person aged 60 to 62 with a 401(k) account has less than one-quarter of what is needed in that account to maintain its standard of living in retirement."
When you create a 401K retirement plan you add money and the dollars added are not taxed.
A traditional 401(k) account is funded with pre-tax dollars and, in general, tax must be paid when the original contribution and earnings are withdrawn.
The employer's matching funds are added pre-tax, as well.
