An employer offers a 401a plan to enable employees to save for their retirement. The plan document will determine the employer contribution formula and will describe which employees are eligible to participate in the plan. Employers may offer the 401a plan to attract and retain employees.
- The employer decides employee eligibility to participate in the plan. The employer also decides on the formula for employer contributions that will be made into participant accounts.
- Depending on the 401a plan design, employees may either be required to make mandatory contributions or have the option to make after-tax contributions to the plan.
- Typically, employees will be permitted to select investment funds offered under the plan.
- Employees can access funds in their accounts when they have a distributable event. Amounts are typically subject to income tax when withdrawn.
The tax information herein is not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding tax penalties. Taxpayers should seek advice based on their own particular circumstances from an independent tax advisor.
Neither Voya nor its agents or representatives provide legal or tax advice. Please consult with your tax and legal advisors regarding your individual situation.