A 401(k) is a retirement savings plan offered by many employers in the United States that allows workers to contribute a portion of their wages to individual investment accounts. The name comes from the section of the Internal Revenue Code that established it. What makes a 401(k) especially valuable is the potential for tax-deferred growth—contributions are often made pre-tax, reducing your taxable income today while allowing investments to grow without immediate taxation. Many employers also match contributions up to a certain percentage, essentially offering free money toward your retirement. Funds are typically invested in mutual funds, stocks, or bonds based on your risk preference. While early withdrawals may incur penalties, the long-term benefits of compounding interest and employer matches can significantly boost your retirement security. Understanding how to maximize your 401(k) can play a major role in long-term financial planning and independence.