A 401(k) is a tax-advantaged retirement savings plan offered by many U.S. employers. It allows employees to contribute a portion of their salary into an investment account, often on a pre-tax basis, helping reduce taxable income in the short term. These contributions grow tax-deferred until withdrawn in retirement. Many employers also offer a match, making it a valuable tool for long-term wealth building. The funds in a 401(k) are usually invested in mutual funds, index funds, or ETFs, giving employees the chance to grow their retirement savings over decades. There are also Roth 401(k) options, which are funded with after-tax dollars but offer tax-free withdrawals later. Penalties apply for early withdrawals, which encourages users to leave the money untouched until retirement. As pensions have declined in availability, the 401(k) has become one of the most important self-directed retirement tools in the U.S., making it essential to understand how to maximize its benefits.