New Delhi, April 22 -- A 401(k) is a tax-advantaged retirement savings plan offered by employers in the United States, allowing employees to invest a portion of their salary for long-term growth. Contributions are typically made through payroll deductions, and the funds are invested in options such as mutual funds, stocks, and bonds. One of the key advantages of a 401(k) is its tax benefit-traditional 401(k) contributions are made pre-tax, reducing taxable income.

There are two major types of 401(k) plans: Traditional 401(k) and Roth 401(k). A Traditional 401(k) allows you to contribute pre-tax income, which reduces your taxable income today. However, withdrawals in retirement are taxed as ordinary income. In contrast, a Roth 401(k) is f...