can place their money in lots of different types of accounts. Some savings vehicles
get tax-favorable treatment or federal protections while others don't. It's easy
to get confused. Below are some of the most common savings vehicles as well as
terms used in connection with emergency funds or savings.
|17 must-know savings terms |
401(k) plan -- An employer-sponsored savings plan that allows employees
to contribute a portion of their gross salary to a tax-qualified savings or profit-sharing
plan. Employee contributions and income earned on the plan are tax-deferred until
withdrawn at age 59½ or later (to avoid early-withdrawal penalty). Money directed
to the plan may be partially matched by the employer. The 401(k) is named for
the section of the federal tax code that authorizes it.