What is a Traditional 401(k) Plan?

A Traditional 401(k) plan allows eligible employees to save in a pre-tax or post-tax (Roth) retirement savings plan. The money grows tax deferred until it is withdrawn.

In addition, a Traditional 401(k) plan provides employers with the option to make contributions on behalf of plan participants, such as employer matching or profit sharing contributions.

What to know about testing

Traditional 401(k) plans are subject to non-discrimination testing on both annual contributions and cumulative assets. These tests exist to ensure plans are set up for the benefit of all employees, not just owners and Highly Compensated Employees.